Natural Gas Price Forecast – Natural Gas Continues to Look Like a Basing Pattern

Christopher Lewis
Published: May 7, 2024, 13:36 GMT+00:00

The natural gas market has been slightly bullish as of late, as we are at massively low levels. At this point, I have a position, but it isn’t levered and is in the form of an ETF.

In this article:

Natural Gas Technical Analysis

You can see that we are going to go back and forth right around the $2 level and I think a short term pullback is likely to attract a lot of attention as we did break out of the range. Now, I do think we are in the process of building some type of base to go higher.

And that breakout could come later this summer, perhaps even as late as the fall. But if we get some type of geopolitical situation that gets out of control in the Middle East, or if we get a heat wave between now and the end of summer, that could be the catalyst to go higher. Quite frankly, we are in a situation where there is a lot of oversupply in natural gas, but at the same time, drillers aren’t making much money, and they are starting to consider stepping away.

This is a market that’s been consolidating with a rounded bottom for a while, and I am long in the market right now, but I am in an ETF. So, while it has moved quite nicely as of late, my gains are somewhat modest. But it’s a longer term position for me, and I’m waiting until we get to about $2.50 to take profit.

We’re at such a historically low level, going back in the longer term charts, that it does make a certain amount of sense that we get a relief rally sooner or later, if for no other reason, then it gets cold again. Because of that, I’m not levered, and I think leverage is something that’s horrible in natural gas markets to begin with.

Looking at the technical analysis, the 20 day EMA is ready to break above the 50 day EMA, and that would be a bullish sign. But we still have the 200 day EMA right around the $2.35 level. In general, a pullback probably offers buying opportunities at the first sign of a bounce, but again, you have to be very cautious with your position sizing.

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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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