Natural Gas Price Analysis – Natural Gas Jumps on Colder Weather Forecast

Natural Gas Technical Analysis

Natural gas markets are up a massive 13% as we are sitting at the $3.50 level. But keep in mind that the session will have been greatly influenced by the Martin Luther King Jr. holiday. The Martin Luther King Jr. holiday had shortened hours, and of course, the American traders themselves, for the most part, aren’t even going to be at work.

But there are reports that starting the 26th, there should be an Arctic blast of cold air in the United States, driving up demand. Asian demand is starting to pick up again as well for exports of liquefied natural gas, so that, of course, helps as well.

And then, when you look at the charts, the $3.00 level, which I had mentioned Thursday and Friday, I believe, was an area where if you were going to see a bounce, that was where it could happen. Now we find ourselves sitting just below the 200-day EMA, and despite the fact that there will be an increase in demand, production is still elevated at the moment.

A Push and Pull Situation

So, I think you have a little bit of a push and pull situation here. If we can clear that 200-day EMA to the upside, then it opens up the possibility of testing the 50-day EMA near $3.83.

A pullback from here wouldn’t necessarily be the worst thing in the world. It could just be the continuation of a consolidation area, which could very well end up being an accumulation, as it is an extraordinarily cheap level for this time of year.

So generally speaking, I’m bullish, but I also recognize that we may have a couple of days of bouncing around between $3.00 and $3.50 to get confidence built back up.

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