Natural Gas Price Analysis – Natural Gas Continues to Flounder

Natural Gas Technical Analysis

The natural gas markets have been miserable over the last several weeks, and it looks like we’re going to see more of the same as we simply cannot seem to get towards the $3 level. At this point, it’s difficult to short this market; it has fallen so much, but I certainly wouldn’t be a buyer.

Any rally at this point in time, for me at least, is an invitation to start shorting again. I do think you’ve got a market that has a lot of seasonal problems right now. Temperatures are quite comfortable, and therefore, demand for heating will be nonexistent. There is talk of the Europeans perhaps importing a lot of gas from the United States, which is where this contract is based, but that’s not going to be a thing for several months.

Seasonal Demand and Market Strategy

So in this environment, I think you have to look at this as a market that, quite frankly, is one that you’re waiting to short. I’d love to see some type of pop higher that I could get involved with, especially near the $3 level and start selling again. I think that actually would probably be the best way forward to trade this market.

There are other ways to do it, you don’t have to do it in the futures market, you can do it in CFD markets, you can do it with ETFs, but either way I’m pretty bearish and probably won’t be bullish for several months, at least not until we get a heat wave in the United States at one point or another this summer. But those are short-lived. The real demand, of course, comes when we start trading in winter contracts. Right now we are currently trading the May contract, one of your milder months out of the year.

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