Natural Gas Markets Continue to Run Into Resistance

Natural Gas Technical Analysis

Natural gas markets have rallied significantly during the trading session on Thursday to test the overall resistance that we have seen over the last three sessions in a row. The $6.50 level was a major barrier that the market could not overcome previously, and now it looks like we are going to fail there again. We formed a massive shooting star during trading on Wednesday, and Thursday is looking very much the same. Ultimately, the biggest problem natural gas will have is that although there is a cold snap coming this weekend, it is short-term in duration, as by the middle of next week, temperatures in the northeastern part of the United States should be in the mid-70s.

At this point, I would anticipate that the $5.50 level could be the initial support level underneath, but if you are going to short a market that has been strong, you have to be aware of the fact that it does not come without risk. You need to be very cautious about position sizing, because of the inherent volatility of a potential trend change.

The alternate scenario would be that we break above the $6.50 level, but quite frankly I think that is going to be difficult to make happen. If it does happen, that would be an explosive move, and one would have to think that sooner or later, demand would plummet just due to the price alone. There has been a lot of speculation that the European Union is going to start importing more LNG from the United States, but quite frankly they do not have the infrastructure to “re-gasify” liquid to a usable gas form.

Natural Gas Price Forecast Video 08.04.22

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