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Natural Gas Price Forecast – Natural Gas Markets Bounce From Trendline Early

By:
Christopher Lewis

The natural gas markets have rallied just a bit during the trading session on Wednesday, bouncing from an uptrend line after taking a massive plunge the previous session.

Natural gas, FX Empire

In this article:

Natural Gas Price Forecast Video for 30.11.23

Natural Gas Technical Analysis

The natural gas markets took a slap across the face during the Tuesday session, as it has been released that the expected weather pattern in the United States between now and mid December might be mild. This is what I had been talking about previously on keeping your leverage low, because the natural gas market is so highly sensitive to the latest weather report out of the northeastern part of the United States. You are literally trading the weather when you are trading natural gas. That being said, there are some technical factors to take into account as well.

The trendline also coincides with the 50% Fibonacci level, from the recent 40% shot higher. Because of this, there are probably value hunters coming back into the market, and as somebody who lives in the northeastern United States, I can tell you it is currently 24°F, or subzero Celsius. Yes, it should get a little bit warmer from here, not nearly enough to keep me from turning on my heat. This in and of itself tells me how fickle the market is, but there are also other things that traders are concerned about.

One of the biggest concerns right now is going to be whether or not there will be enough electricity demand, if the market does in fact see a massive recession. That does put downward pressure on natural gas, but at this point I think it’s more about the weather. That being said, it is overdone to the downside as of late, but jumping “all in” is a very dangerous thing to do. In fact, this is exactly why I’ve been in the ETF market, because I am just now somewhere around breakeven. I still believe this market rallies from here, but to jump in with the huge position is asking for trouble. We have clearly seen this for the last couple of weeks, and trading the futures market is almost impossible for the average retail trader.

On the other hand, if you wish to play energy at the moment, it’s very likely that oil would outperform, but even that is going to have to worry about whether or not there is a huge drop in demand due to a slowing of economic activity.

For a look at all of today’s economic events, check out our economic calendar.

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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