Natural Gas Price Analysis – Natural Gas Prices in Winter Storm

Natural Gas Technical Analysis

The natural gas market has rallied yet again during the trading session early on Thursday, up another 12% as we are testing the seasonal highs right now. If we can continue from here, it could open up the door to that move to $7 that I had been talking about a few months ago.

But quite frankly, this is all about a cold snap in the United States. While that is exactly what you expect to see natural gas get pushed higher on, the reality is that you have to be cognizant of the fact that it is just that. All it would take is warmer weather coming into the picture on the next couple of weeks in the United States, and prices will drop. In fact, I would almost count on it at this point.

Buy on the Dip Market

Nonetheless, as things stand right now, I think we have a situation where traders continue to look at this as a buy on the dip market. I was a little surprised at how much we dipped from this area here last time. But again, I am looking at the same levels. If we pull back, $5 is possible as support, so is $4.50, and then again $4.

I think, really, at this point in time, it is very difficult to chase the natural gas market all the way up here. Granted, I said that yesterday, but a 12% gain after a 25% gain isn’t something you see very often. It is a cold snap. It is a pretty significant event for the short term, but the short term is what I would stress here. This time of year, I only buy; I do not sell. So that is why I am looking at buy on the dip, not chasing if I can get away with that, and I certainly have no interest in shorting.