Natural Gas Price Analysis – Still Too Much Supply

Natural Gas Technical Analysis

The natural gas market has dipped to the downside during trading on Wednesday in the early hours, but that being said, the market is likely to continue to be very noisy. I think you have a situation where traders are not only watching the $3 level but maybe the $2.85 level. Anything below there would be a complete collapse at this point in time.

Production Levels and Global Demand

We are seeing near record production of dry gas in the United States and that is driving price down despite the fact that Europe may end up being a huge buyer of US natural gas due to the disruptions in Qatar. Ultimately, I think this is a scenario where if we rally from here, you’re looking for selling opportunities especially near the 50-day EMA. This area should continue to be important for technical traders.

The 50-day EMA is an area that traders continue to watch right around that area for selling opportunities if we do bounce, not only due to that but the $3.50 level and the 200-day EMA. Any signs of exhaustion would elicit a lot of selling in that general vicinity. If we were to break above the 200-day EMA, the $4 level could be targeted but at this point in time you would have to see a bit of a crisis in order to see that. All things being equal, I like the idea of fading the market when it gets a little bit overdone to the upside. Shorting is a bit difficult here although it is possible for short-term traders.

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