Natural Gas Price Outlook – Natural Gas Continues to Look at $3

Natural Gas Technical Analysis

The natural gas market has shown itself to be somewhat lackluster in its momentum at this point, as we have just simply not seen any desire for buyers to come in and pick it up. We are sitting just above the crucial $3 level, so we’ll have to wait and see if that holds. I also look at the $3 level as more or less a zone. I don’t really think it’s going to be one of these areas that hold to the penny.

But I do recognize that $3 itself is important. If we break down below $2.85, then I would consider all of this support broken, and then we could go dropping towards $2.50. If we rally from here, then we could test the previous uptrend line, perhaps even as high as the 200-day EMA, but I will be looking for signs of exhaustion in that environment to start shorting again.

I think this is a market that will continue to be very choppy and noisy, but I think there’s an overhang of pessimism, which does make a certain amount of sense when you think about it due to the fact that this time of year, demand drops precipitously. However, the Europeans are importing liquefied natural gas from the Americans, and that has skewed the markets a bit because this, of course, is an American contract.

In other words, we could fall this winter, or maybe this is as far as we go. It will continue to be a fade the rallies type of situation. But the question is, is do we collapse as per usual, or do we just hang out in this area and continue to short the market every time it shows signs of exhaustion after a short term rally? That would be the real question.

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