Natural Gas Price Breaks 50-Day EMA After $3 Rejection

Natural Gas Technical Analysis

The natural gas market has fallen quite a bit during the trading session here on Friday to break below the 50-day EMA early as we head into the New York session. Ultimately, the natural gas market tried to reach the $3 level during the previous session as we rolled over into the October contract, but that may have been a little bit too much.

This is a market that is very seasonal, and the October contract can be the beginning of the turnaround. It just comes down to weather prediction, of course, and the weather in the United States at the moment is very mild, but where it ends up in October, we just won’t know. We won’t have any predictions for several weeks. This is essentially a contract for heating or when there is a heat wave for air conditioning.

October Rollover, European Demand, and Key Price Levels

The real question this year is going to be whether or not the Europeans actually have natural gas coming out of Qatar, and of course, Qatar has recently been buying liquefied natural gas from the United States to help fulfill some contractual obligations for places like Germany and Belgium, etc.

So, ultimately, this is a market that I think does have a floor underneath it somewhere. Currently, it looks like around the $2.65 level, and I am becoming increasingly bullish as time goes on as we go deeper into the year, but I also recognize that it is still a little early for that. So, I’ve basically shifted from very bearish to somewhat neutral.

I’m going to watch the $3 level as a potential ceiling, somewhere around $2.65 for a potential floor, although as we just rolled over into a different contract, history would suggest that maybe the floor is even higher than the $2.65 level as we are now trading a different month.

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