Natural Gas Price Analysis – Natural Gas Continues to See Same Floor

Natural Gas Technical Analysis

The natural gas markets have found the $3 level to be very well supported, and that’s not a huge surprise considering that it is a large, round, psychologically significant figure and an area where we have seen it in the past. If we can bounce from here, traders will jump in and perhaps try to drive natural gas to fill the gap above near the $3.50 level.

The $3.50 level is an area where I think a lot of people will see selling opportunities and pressure. If we can break above there, then we could be looking at the 200-day EMA. Quite frankly, I think we have a possible fade the rally type of situation coming because I don’t know that the markets out there are really capable of pushing too high at this point because we are running out of winter.

Seasonal Demand Shifts

In fact, the next week or so, I think we’re supposed to get a little bit of snow late in the week, but for the most part, it’s in the mid-50s, so about 12 degrees Centigrade. Not exactly freezing, and with that being the case, the demand for natural gas is going to start plummeting.

The freeze is over, so they can get more out of the ground. As we head into the quieter part of the year, and in fact, we’re going to be trading the April contract here in about 9 days or so, we start to see pricing in of less demand until we get to the really hot time of year, which we will have a couple of months before that happens.

I look at any rally with a little bit of suspicion. Typically, I like buying these dips, but it’s a little late in the year. I’m probably going to err on the side of caution and just fade signs of exhaustion after pops.

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