Natural Gas Price Outlook – Natural Gas Continues to Hover Just Above Major Level

Natural Gas Technical Analysis

Natural gas markets have gone back and forth a bit during the trading session in the early hours of Thursday, as we continue to just bump along just north of the $3 level. Keep in mind that natural gas has seasonality to it, and it certainly looks as if that seasonality is playing out. And what I mean by that is the heating demand falls off of a cliff this time of year, and therefore it’s not a huge surprise to see that prices are weak.

We are looking at the 50 day EMA breaking down below the 200 day EMA. That of course is the death cross, which of course is a negative signal for a longer term move. The $3 level is an area that represents a large, round, psychologically significant figure. And it’s an area where we’ve seen enough action previously that I think you need to look at it.

If we break down below the $2.85 level, then you could see a bottom fallout in this market. We could go much lower. You could make an argument for a really wicked head and shoulders pattern over the last nine months. I don’t know if I will buy that, but some people are probably looking at it. Ultimately, this is a market that I think continues to be very noisy. And I think what you’re looking for is a short term rally that you can start selling into at the first signs of exhaustion because quite frankly, this is a market that probably won’t see a pickup in demand anytime soon, at least not for a couple of months. It’s not until we break above the 50 day EMA and the 200 day EMA indicators that I even begin to entertain the idea that we are starting to price in more demand from fall.

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