Natural Gas Price Outlook – Natural Gas Continues to Attempt a Rally

Natural Gas Technical Analysis

The natural gas markets rose a bit during the trading session on Tuesday as the $4 level continues to be significant support. If we can break above the $4.20 level, then the market could go much higher from here, but as things stand right now, I think we are still in that testing-the-waters phase of support.

With this being the case, if the market does take off to the upside, it would follow the cyclical pattern, seasonal pattern as well, that I typically pay attention to, as colder temperatures would be in the forecast for the United States down the road.

Stability in the Uptrend

The next couple of days will be warm, but that is what caused the initial fall, I think. That and, of course, the drawdown in storage was a little less than people anticipated. We are getting ready to roll over into the January contract on Monday, and that is a contract that is generally positive.

I think at this point in time, the biggest problem natural gas has is that it just gotten too far ahead of itself. I would not be surprised at all to see natural gas test the $5 level again, but it might take some time to get there, and quite frankly, a little bit more stability in the uptrend would be desirable.

If we were to break down below the $3.75 level, it could open up a move down to the 200-day EMA presently sitting at the $3.61 level. This has been a vicious pullback, and a little bit of stability probably goes a long way in building up confidence, which I suspect is what we are doing now. This week, being Christmas week of course, causes havoc with liquidity and the market hours, so I do not know that we get a big move right now, but what I do think we do is continue to build a little bit of support for a market that I think is going to start rallying again next week.

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