Natural Gas Price Analysis – Natural Gas Bumps Along Bottom

Natural Gas Technical Analysis

The natural gas market has bounced slightly from its initial fall during the trading session on Tuesday, but we continue to see a lot of bearish problems in this market, to say the least. Natural gas will continue to see a lot of noise, but ultimately, this is a situation where demand just isn’t there.

With that being the case, I think the market will probably focus on the $2.75 level as a potential floor in the market. If we were to break down below $2.70, then I think it opens up a move down to the $2.50 level. To the upside, we have the $3 level, which is a large, round, psychological figure that a lot of people will be watching very closely.

Fading Short-Term Rallies

Ultimately, I don’t have any interest in trying to get too cute here. I think a little bit of a bounce could be played, but I’m much more comfortable fading short-term rallies that show signs of hesitation and exhaustion.

Natural gas is in abundance in the United States right now and despite the fact that the market will end up being perhaps strained a bit next winter if the infrastructure in the Persian Gulf is as badly damaged as people are hinting at, that’s a story for 6 months down the road. It’s not a story for right now.

Demand in the United States just simply isn’t that strong and temperatures, of course, will be getting warmer. In fact, we are already trading the May contract, which is typically a very mild time of year. Therefore, I fade rallies, especially anything that gets above the $3 level.

If you’d like to know more about how to trade natural gas, please visit our educational area.