Natural Gas Price Analysis – Natural Gas Drops to Start the Week

Natural Gas Technical Analysis

The natural gas market did try to rally a bit at the open on Monday in Asian trading, but we have turned around and fallen quite a bit. That’s not a huge surprise, quite frankly.

Natural gas markets rose a bit as we priced in the idea of flipping over to the July contract and the possibility that we might get a heat wave. But I would also point out that natural gas demand in general is pretty weak this time of year, and I think you have to still be fairly bearish on natural gas overall, as market participants will continue to look at the fact that there is plenty of supply out there and the weather in the United States isn’t really helping.

Market Outlook and Technical Support Levels

So, a drive towards the $3 level is, quite frankly, what I’m expecting. The 50-day EMA sits right there as well, and really, that should also offer support, but it really wouldn’t surprise me to go below there as well.

Also, if we were to break above the $3.50 level, then we go much higher. That would almost certainly be accompanied by some type of forecast for huge air conditioning demand to come down the road. I don’t see that happening, at least not quite yet this year.

So, I remain bearish. This time of year, I fade rallies that show signs of exhaustion. We may have just gotten that signal again. Because of this, I am bearish yet again at this point in time.

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