Natural Gas Price Analysis – Natural Gas Rallies Early on Wednesday

Natural Gas Technical Analysis

The natural gas market has rallied quite nicely during the trading session on Wednesday to test the 200-day EMA again, but it looks as if we could run into a little bit of trouble. Falling from here opens up the possibility of a move back down to the $3 level, and really what we have right now is a fight about whether or not July is going to drive up demand for air conditioning in the United States, which typically it will, but it’s normally a short-term phenomenon, like a week or maybe 10 days.

Summer Demand and Key Technical Levels

So, rallies at this point in time for me are still selling opportunities, and I do think that eventually we will probably break down below the $3 level. If we break down below the $3 level, then we could see this market looking to the $2.75 level. This time of year, I just don’t have any interest in buying natural gas because it takes so little to knock it off of its perch.

If we did break above the $3.50 level, more likely than not, it could be a scenario where traders are looking at some type of heatwave coming, and again, at that point, I just step to the side, and I look for signs of exhaustion, and I start shorting.

Now, a few months from now, it will be a completely different situation as Europeans will almost certainly be taking a lot of US liquefied natural gas as imports, and that should drive up the price quite nicely. That being said, a little bit of shorting is what I’ll be looking to do.

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