Natural Gas Price Forecast – Natural Gas Building a Base?

Christopher Lewis
Published: Feb 26, 2024, 14:54 GMT+00:00

Is it possible that natural gas is finally building some type of base? That remains to be seen but you certainly can make that argument.

In this article:

Natural Gas Technical Analysis

You can see the market will continue to see a lot of noise in this area and I do think it makes a certain amount of sense because we are so oversold that it now seems to be a scenario where we are trying to build up a base due to the fact that sooner or later somebody’s going to jump in and buy this.

Keep in mind that drillers are going to step away from the natural gas markets and stop supplying because quite frankly, it’s not profitable to do so. The $1.50 level underneath, I believe, continues to be a major support level and therefore you need to be very cognizant of it. If we can break above the $2 level, we could see a little bit of momentum.

But really at this point, the $2 level is a situation where it could be a bit of a ceiling. Right now, I think we’ve got a situation where market participants are going to either run this back up or go sideways. I think the selling is about done. There really isn’t much further to go until basically natural gas becomes free. And you can’t have that obviously, the $1.50 level back in 2020 is a hard floor. So now I think we begin to try to find out whether or not we can stabilize.

And if we do, then this might be a nice long term swing trade. The catch, of course, is you have to do it with a position and an instrument that allows you to do it small enough that it won’t hurt you. ETFs, maybe a CFD, and very possible futures markets, are going to be tough because of the margin involved, the size of the contract, etc.

At this point in time, I don’t want to short natural gowns, although I recognize you could just as easily ignore it. It all comes down to how much patience you have when it comes to trading an instrument, but right now natural gas does not look like it’s in a hurry to get overly aggressive to the upside so keep that in mind. However, swing traders might like this set up.

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About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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