Natural Gas Price Forecast: $3 Resistance Blocks Momentum

Natural Gas Technical Analysis

The natural gas market has tested the $3 level again and has failed again. This is a market that seems to be stuck at the moment, which makes a certain amount of sense considering that we are in what is now known as shoulder season.

We are getting out of the hot part of the summer, where there might be heavier electrical demand due to air conditioning, but not cold enough to get to the point where heating picks up. And in this environment, that typically means somewhat stagnant markets.

Minimal Dent in Storage

Keep in mind that even though there is a story to be told about European demand for natural gas and the increasing exports of liquefied natural gas out of the United States, the reality is that we still aren’t putting much of a dent in the storage right now.

As long as that’s the case, it’s a simple supply-and-demand situation. There is plenty of supply out there. Americans aren’t turning on heat yet, so that is something that we’ll be waiting for as well.

And that being the case, I think you’ve got a scenario where the $3 level makes a significant resistance barrier due to the fact that it’s a large, round, psychologically significant figure. Options are probably sitting right above there, and therefore it all ties together quite nicely.

If we were to break above the $3.05 level, then maybe we might see some momentum.

Underneath, I see support at the 50-day EMA at $2.88, and right now, this time of year, natural gas tends to be choppy, so short-term traders might be attracted to this fairly well-defined little range we have right now.

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