Natural Gas Price Outlook – Natural Gas Continues to Look for a Reason to Bounce

Natural Gas Technical Analysis

The natural gas markets have rallied just a bit during the early hours on Tuesday as we continue to see a lot of noisy behavior. The market is hanging around the $3 level. So, with that being said, I think you’ve got a situation where we are doing everything we can to recover, but we’ve got to get past the $3 level at the very least, if not more than that.

If we do break above the $3 level, then the $3.20 level gets targeted after that. If we break down below the $2.80 level, then you have a scenario where traders will be looking at this through the prism of a market that is collapsing. And I would anticipate that the natural gas market could drop to the $2.50 level.

Even if we were to turn around a rally rather significantly, the 50 day EMA is starting to break down below the 200 day EMA and it looks a bit like the death cross is getting ready to kick off fairly soon. Those two moving averages are also sitting on top of the previous uptrend line, which should offer a significant amount of resistance. I do anticipate a lot of noise, but you also have to understand that this time of year is typically pretty poor for natural gas as heating demand drops. We don’t necessarily have hot enough temperatures for huge air conditioning demand, so we’re just kind of stuck like this.

All things being equal, I prefer to short the market every time it rallies and shows signs of exhaustion. So, I’m looking for long wits to the upside to take advantage of in order to start selling again, at least for the time being. We are not too far down the road from focusing on fall and then eventually winter. Once we get to that point, natural gas will go screaming higher, but we’re not there yet.

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