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Natural Gas Falls Quickly Back Into Downtrend

September 11, 2018

Henry Hub Three Averages

The uptrend in Henry Hub spot prices that started August 9 was short lived. Prices have re-trenched back to levels not seen since late July. Some market analysts credit recent tropical storms for a reduction in weather-driven demand.

The utilization of three exponential moving averages (EMA) is a proven tool to help confirm commodity price moves. Using a short (10 day), medium (20 day) and long (50 day) EMA can help market participants in their planning. When the short EMA is above the other two EMAs, it’s considered an “uptrend.” When the short EMA is below the other two, it’s considered “downtrend.” The trend is “neutral” when it lies between the other two EMAs. Last week, Henry Hub spot prices moved out of a 21-day “downtrend” and into “neutral” according to the theory of three averages. Historically, the longer the trend is “neutral” the bigger the breakout in either direction once price action makes a move higher or lower.