Natural Gas Price Forecast – Natural Gas Markets Form a Hammer

Natural gas markets have initially fallen during the trading session on Friday, but then turned around to show signs of life again. By doing so, we ended up forming a bit of a hammer which is focused on the $3.75 region. Nonetheless, this is a market that has been in a pretty significant downtrend over the last couple of weeks, so I think what we are looking at here is the possibility of the market catching its breath, not necessarily changing its trend.

NATGAS Video 20.12.21

Keep in mind that the temperatures in the United States are much milder than anticipated, and therefore it drives down demand for natural gas. That is going to continue to be the story going forward, as we are already trading the January contract. Before you know it, will be trading the March contract again, which is typically a time of year where you start to see natural gas fall. The winter season will have been a bit of a disappointment for most natural gas bulls, even though some of you out there have been buying this in reaction to what is going on in Europe.

Keep in mind this is a very localized market, as transportation of LNG is not the easiest thing to do. Ultimately, this is a market that you fade rallies and I like the idea of looking for selling opportunities closer to the 200 day EMA but would short this market if we broke down below the bottom of the candlestick for Friday. At this point, I think the $3.50 level is the next true target.

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