Natural Gas Price Outlook – Natural Gas Continues to Hover

Natural Gas Technical Analysis

The natural gas market has rallied a bit during the early part of the trading session here on Thursday. At this point in time, it looks like we are just basically hanging around in a consolidation area near the $4.30 level. This is an area that we had seen a lot of noise at previously, but when you zoom out, you can see we do have further to go. The gap from a couple of weeks ago, which was when we rolled over into the December contract, is a gap that I think could get filled eventually, but we need some type of seriously negative price action.

I don’t know if we fill the gap completely, but what I do need to see at this point in time is a pullback to offer enough value that I can jump into this market. I do like natural gas, and at this time of year, I will not short it. We are trading the December prices in the December contract, and that is a cold month, so demand will pick up. If it does get a little bit of warmer temperatures than usual, that’s fine—it drops, and then you buy it looking for the next cold snap, which undoubtedly will come.

For the next couple of months, I’m long only on natural gas. It’s just a matter of trying to get a decent price so that I can step in and start buying. I’ve got no interest in shorting it, like I said, and at least until we get to something like the March or April contract, I’m going to be looking for any dip as a trading signal.

I’d be particularly interested in the $3.60 level, but that is a pretty significant drop from here. Last month, when we opened up the November contract, we gapped higher, rallied pretty significantly, pulled back to fill the gap, and then gapped higher at the open again for the day here on the 20th. We never filled that but then gapped massively when we opened up the December contract.

So, I think we’re going to continue to see that type of behavior. Now all I need to do is see a price that’s worth chasing. I don’t like chasing after a move like we’ve seen here recently, and in fact, last week we had something like a 30% gain. That’s not what prudent traders do.

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