Natural Gas Markets Hit a Ceiling

Natural Gas Technical Analysis

Natural gas markets have rallied a bit during the trading session on Friday to break above the $5.50 level. As you can see on the chart, this is an area that has been very resistive as of late, so this is an inflection point that will be very interesting to pay close attention to.

Making this a significant coincidence of time it is the fact that the United States in the EU has finally signed an LNG deal, as the Europeans are planning on weaning themselves from Russian gas in the next few years. The question now is whether this will put a “higher floor” in the markets, or just simply make the swings on a cyclical basis much more violent?

Looking at the candlestick for the Friday session, it does suggest a neutral candlestick, and it also suggests that we are running into trouble. The markets are in the process of deciding whether or not we can continue to go higher, but it is worth noting that we have pulled back rather significantly midday. If we break down below the bottom of the candlestick is likely we go looking towards the lows of the Thursday session, perhaps even the $5.00 level.

Over the longer term, it will be interesting to see this plays out, but we are most certainly testing a major area of selling pressure that has come into the market multiple times, it is also worth noting that commodities, in general, are inflating so that might be a bit of a knock-on type of effect. I think the only thing you can count on is a bit of volatility but when the warmer temperatures get here for good, that will be very negative.

NATGAS Technical Analysis Video 28.03.22

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