Natural Gas Price Analysis – Natural Gas Slightly Bid on Thursday

Natural Gas Technical Analysis

The natural gas market initially rallied during the trading session on Thursday as we continue to see some questions asked about supply. Not here in the United States or in this contract, but in other places like Europe. After all, the market is likely to continue to see the question of the natural gas in places like Europe really spiking and therefore Europeans importing American natural gas.

Remember, this contract is an American-centric gas contract as it is based on Henry Hub in Louisiana. The 50-day EMA sits at the $3.50 level right along with the 200-day EMA. That is an area that I think continues to be a little bit of a barrier, but if we can break above there then we can take off to the upside to the $4 level.

Waiting for Exhaustion Near $3.50

That would probably take some type of massive negative headline. The most likely one would be even more disruptions in natural gas supply around the world. That being said, we are in the time of year where natural gas demand starts to drop drastically in America, so even with a little bit more in the way of exports, the reality is price is probably somewhat limited on the upside here.

I am looking for signs of exhaustion that I can start shorting. I would love to short somewhere near $3.50 but we will have to wait and see if I get that opportunity. What I am looking for is a spike, a long wick to the upside, and then a little bit of follow-through to the downside; at that point I am willing to short. I think this is a short-term trader’s type of scenario; you are going to have to be pretty nimble.

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