Natural Gas Price Forecast – Natural Gas Pulls Back From Overextended Move

Natural gas markets initially tried to rally a bit during the trading session on Wednesday but gave back the gains to break down rather significantly. At this point in time, the market looks as if it is going to continue to drop, perhaps looking towards the $3.40 level, which is an area we had broken out of previously. At this point in time, the $3.40 level is of course a significant area worth paying attention to, mainly due to the fact that it was the top of a huge consolidation area.

NATGAS Video 08.07.21

From the breakout, it measures for a potential move to the $4.40 level, but some of the selloff that we have seen is probably due to the fact that tropical storm Elsa has avoided a lot of the major natural gas refinery and production area. Because of this, the output of natural gas should continue to pick up. There has been the devastating heat wave in the United States, but quite frankly the longer term situation is that there is more than enough natural gas out there to keep the markets are oversupplied. The short term, I do believe that we are going to drop towards the $3.40 level and will have to as serious questions of the uptrend.

If we did break down below the $3.40 level on a daily close, then it is possible that we could go looking towards the 50 day EMA underneath at the $3.20 level. Ultimately, this is a market that I think continues to see a lot of volatility, but quite frankly we had gotten overbought, so this pullback is probably welcome by both the bullish and bearish traders in general.

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