Natural Gas Price Analysis – Natural Gas Challenging 200 Day EMA

Natural Gas Technical Analysis

The natural gas market has shown itself to be pretty noisy over the last couple of days as we dance around the crucial 200-day EMA. That being said, this is a market that I think will continue to see a lot of interest and with that being the case, I am watching this area very closely because this time of year is typically pretty negative for natural gas. We have a scenario where traders are looking at a serious lack of demand coming out of the United States and that has a major influence on what happens next.

Seasonal Demand Dynamics

If we do break above the $3.50 level, that would be a bit surprising. It would almost certainly have something to do with concerns about weather, heat waves specifically. Otherwise, it’s only a matter of time before we roll over and head back to the $3.00 level. After all, there is no heating demand at all in the US at the moment and until we get that surge of electrical demand for air conditioning, generally speaking, natural gas has a hard time this season.

Now, as we are rolling into the July contract here recently, it does make a certain amount of sense that maybe traders are trying to price in heat waves, but really, right now, there’s no reason for this other than that. Longer term, this is a sell the rally at the first signs of exhaustion type of situation. And if we do in fact see this market start to roll over, I won’t hesitate to short it.

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