Natural Gas Markets Ready to Fall Again

Natural gas markets initially tried to rally on Friday but gave back gains as we are forming yet another week candle. The natural gas markets continue to be one that you should be selling and not buying, because quite frankly the demand for natural gas is about to drop rather significantly. With warmer temperatures coming, it is only a matter of time before the US uses a lot less of the contract. With that being the case, I like the idea of fading short-term rallies that show any signs of hesitation, despite what is going on in Ukraine.

NATGAS Video 28.02.22

If we were to break down below the $4.33 level, I think that kicks off more selling, perhaps down to the 200 day EMA at the $4.14 level. Natural gas has no business rising the way it has the last couple of attempts, especially this time a year as we are almost through winter in the northeastern part of the United States. While European gas futures rose 62% during the height of the panic, the reality is that Henry Hub only did a little bit of a sympathetic move, and therefore it was a great short just waiting to happen.

Longer-term, I believe this market goes looking towards the $3.50 level, but the $4.00 level probably will offer a little bit of psychological support between here and there. $5.00 above has been significant resistance, just as one would expect due to the fact that it is such an important figure. With this, I think we are starting to focus on fundamentals again.

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