Gas in a Box 7/31/2020

Natural gas at the 4 hour view.

It turns out that natural gas has been in a downward channel since 2018. Furthermore, in the last 3 months, gas has been in a trading box.

You know what this means? Gas has become predictable. It may look choppy at first, but it's trading in a general range between 1.58 to 1.93. There were spikes above and below that range. However, those spikes do not last long at all. Furthermore, it seems the upward and downward movements last in a weekly cycle.

Since equities seems to be going no where, I think I found my favorite commodity to trade. Personally, I would mainly long gas at the bottom. Why? We are at historic lows for natural gas. Gas is also seasonal. Usage has increased due to the need for more air conditioning in the summer heat. I would still use UGAZF since the liquidity is still there. I would not short gas unless seasonality, lower usage, and a cyclical correction are all on your side. Shorting takes a lot more skill than longing.

Once we start recovering economically, natural gas may skyrocket due to increased usage. How much usage would increase if California and New York actually open for business?