Natural Gas Price Outlook – Natural Gas Continues to Grind Higher

Natural Gas Technical Analysis

The natural gas market gapped higher just a touch in the early hours of Wednesday, but we haven’t really gone too much higher. This makes a certain amount of sense, as we are sitting right at massive resistance that could very well extend to the $3.20 level. The 200 day EMA sits at the $3.25 level. So, I do think there is a lot of resistance baked into this market right now. The biggest question we will have is whether we can break out because we are about 10 days or so from rolling over into the November contract.

At that point, you can start to think about cooler weather. We don’t really see a massive heat wave at the end of summer or early fall here in America, either. So, demand for air conditioning hasn’t been strong. Now, of course, the question is going to be, will the global economy slow down? Because, it is a well-known correlation that natural gas moves with electricity at times when industry needs it. If industry slows down, it needs less electricity and the knock on effect continues.

From a technical analysis standpoint, we are between the 50 day EMA and the 200 day EMA. So that probably would cause some noise as well. If we turn around and drop from here, we have to pay close attention to the bottom of the Tuesday candlestick because anything below there could cause a bit of a flush and a move down to $2.75 to fill the gap from a couple of weeks ago.

On the other hand, if we break above the 200 day EMA, I think at that point in time, you have to be thinking bullish. We are in the midst of a fluctuation in the trend, I believe, and we are getting kind of close to that time of year when natural gas is cyclically stronger. We’re just not there yet. So expect a lot of choppy volatility. And in fact, it really wouldn’t surprise me to see sideways action for a moment before making that shot higher, we’ll just have to watch those weather reports.

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