Natural Gas Price Outlook – Natural Gas Continues to Consolidate

Natural Gas Technical Analysis

Natural gas markets have drifted a little bit lower during the trading session on Thursday in the early hours, but we still find a lot of noise in this market. At this juncture, it looks like we are consolidating between the $4.70 level and the $4.20 level. That is not a huge surprise. A 50-cent range is not overly rare in this market; it is pretty typical.

What is concerning is the fact that it had jumped 30% and then kept going as we rolled over into the December contract. While the December contract, as well as January and February, are very bullish, the biggest problem is chasing the market at these elevated levels. At the very least, you want to see some type of pullback toward the $4.20 level before beginning to think about buying, because Murphy’s Law dictates that as soon as you start buying at an elevated price, it becomes the top. Experience has taught that chasing a market is one of the best ways to lose money trading markets.

If the market were to pull back from here and go looking to the $4 level, that would be even more interesting, and then again, the 50-day EMA at the $3.77 level. This is a time of year when natural gas is not shorted, as demand picks up for heating in places like the United States and Europe, which are two of the major drivers of natural gas pricing. With all of that, the outlook remains bullish, but a better price is needed to risk money at this point.

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