Natural Gas Hits Brick Wall

Natural gas markets have rallied initially during the trading session on Monday, spiking all the way towards the $5.05 level. However, we have seen a complete turnaround of the market as it finally found plenty of selling pressure. Yes, the temperatures in the United States are plumbing over the next couple of days, but we have gotten a bit too far ahead of ourselves. You can see we are at the bottom of the previous descending triangle, and therefore I think it is probably only a matter of time before we see some type of push back to much lower levels. After all, natural gas is a very fickle market, and moves on week to week weather forecasts for a very specific part of the United States.

NATGAS Video 01.02.22

If we do break above the top of the candlestick, that would obviously be a very bullish sign and could open up the natural gas markets for a move to the $5.50 level, but you can see that we have seen such a pushback at this crucial area that it is difficult to imagine that will be easy. I do believe eventually we will roll over and go looking towards the 200 day EMA again, and quite frankly much lower than that. That being said, it does not necessarily mean that we get there easily or quickly, but we are in the wrong time of year to expect a significant amount of demand is suddenly pick up for a sustainable move. We are already trading the March contract, which of course is the beginning of the end of winter.

For a look at all of today’s economic events, check out our economic calendar.