Natural Gas Price Analysis – Natural Gas Continues to Build a Base

Natural Gas Technical Analysis

The natural gas market continues to be very noisy and choppy, but at this point in time, I think the main word here would be basing. I think the 200-day EMA offers support makes quite a bit of sense, as the $3.50 level sits just below it. It is worth noting that we are trading in the March contract now, which is in the extreme backwardation of the spot market. So, if your chart is somewhere closer to $5, that’s why.

The futures market suggesting that we’re going to be down in $3.85 territory in March also tells you that the spot market should fall. I like the idea of buying short-term dips. I do think eventually we will break higher. I believe this is a buy-on-the-dip type of scenario.

Market Seasonality

I don’t think we will make it to the highs again, but I do think that given enough time, this is a market that I think you probably will see one more spike this winter. Remember, it’s a very cyclical and seasonal market as heating demand can be extreme in the winter time.

The temperatures in the United States are cold; there’s serious wind chill issues at the moment, so we are drawing down natural gas. Eventually, we warm up a little bit and then they start fracking and drilling more and more, bringing the supply back up to normal levels. One more run higher is what I’m looking for this winter, and then after that, we start to discuss the idea of shorting into the spring.

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