Natural Gas Price Forecast – Natural Gas Markets Show Exhaustion

Natural gas markets have been out of control as of late, due to the heat wave in the United States, the potential damage from hurricane Ida, and of course the Russians deciding not to ship as much gas to the European Union. All of this is starting to affect the supply/demand balance, but at the end of the day it is only a matter of time before supply catches back up. Regardless, from a purely technical standpoint, when you look at this chart you should be able to see that we are most certainly overbought.

NATGAS Video 07.09.21

This is not to say that we cannot go higher, just that we are in desperate need of some type of pullback to continue the momentum. I do believe that the target at this point in time is probably going to be $5.00, but in order to get there we may need to pullback so that people can be much more comfortable getting long. This is not to say that you should be a seller of this market, just that you should look for some type of value underneath that you can take advantage of.

I do believe that the $5.00 level above is going to be like some type of “brick wall” in the market, and it will almost certainly attract a lot of headline attention. Because of this, I would be very surprised to see this market break through that level right away. I think it will be more or less a bit of a process if we can break above there. Alternately, if we break down below the $4.00 level, at that point I would expect that the trend is over, and you can start shorting at that point. I look at the $4.20 region as a major area of short-term support if we can drift lower and go looking towards it. Either way, you simply cannot short this market right now.