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Natural Gas Price Forecast – Natural Gas Slams Into Resistant Area

By:
Christopher Lewis
Published: Jan 9, 2024, 14:21 GMT+00:00

The natural gas markets have taken off during the early hours on Tuesday but face a significant amount of resistance just above.

Natural Gas pipes, FX Empire

In this article:

Natural Gas Price Forecast Video for 10-01-2024

Natural Gas Technical Analysis

Natural gas has rallied rather significantly during the early hours on Tuesday but faces a significant amount of resistance just above. The $3.33 level has been a major resistance barrier. And although we have seen a lot of upward momentum recently, it’s worth noting that this is all based on a particular storm in the Northeastern part of the United States. This is the biggest mistake that retail traders make, the focus too much on the rest of the world as this contract is the Henry Hub contract, which is based out of Louisiana.

In other words, when this storm stops, natural gas will start to drop again. With that being said, I’m looking for signs of exhaustion to start shorting, but right now we just don’t have it. Natural gas markets tend to be very thin at times, and therefore you get these exacerbated moves. There are a handful of major players that kick the market around, so always keep that in mind.

One thing that’s worth noting is that the futures markets are starting to price in the month of February, which means they aren’t that far away from pricing in March, which is when natural gas demand will fall off of a cliff as temperatures warm in the northern hemisphere. There will be the occasional shot higher, and if you’ve been paying attention, I did suggest that we would get at least one more this winter, and that’s exactly what we are seeing.

We may even see another one after this, but these are short-term trading opportunities, not investment ideas. The reality is that natural gas will continue to suffer due to the overabundance of it in the system. And although we have drained quite a bit here over the last week or so, the reality is we are light years away from changing the longer-term fundamentals. With that being said, I’m looking for an exhaustion candle to start shorting. I don’t see it yet, but I’m patient enough to take advantage of it. Longer term, I think that we’re still looking at a range between $2 on the bottom and somewhere around $3.33 on the top.

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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