Natural Gas Price Analysis – Natural Gas Drops Again on Friday

Natural Gas (NG1!) Technical Analysis

The natural gas market initially rallied a bit during the early hours on Friday but then fell apart. The market is looking very much like one that is focusing on the fact that the US contract is going to be very focused on weather in the United States, and while we are getting some cold days over the next couple of sessions, the reality is we are at the end of winter, and demand should drop overall.

It is very likely that anytime we rally at this point in time it ends up being a selling opportunity. There are some questions to be asked about the demand coming out of Europe, and of course, the fact that energy in Europe has been cut off, and that might provide a little bit of a boost for natural gas in the short term, but overall, this is a “sell the rally” type of scenario.

A Bearish Outlook Technical Analysis

The $3.50 level would be a great opportunity to start shorting signs of weakness if we even get there and unfortunately, I just don’t think we are going to get that opportunity right away.

We will probably continue to bump along in range-bound trading on short-term charts. I prefer the short side of the setup, not the long side, so ultimately this is a scenario where I think you just let it bounce, you start shorting and then you take your profit pretty quickly. You are going to have to be somewhat nimble, but this time of year is decidedly bearish.

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