Natural Gas Price Outlook – Natural Gas Continues to Look Heavy

Natural Gas Technical Analysis

The natural gas market initially tried to rally during the session here on Thursday but gave back gains as we threatened a major uptrend line that is now offering a bit of resistance. Ultimately, this is a market that I think given enough time will probably have to determine whether or not we are going to eventually break to the upside or follow what is the typical cyclical pattern.

That, of course, would be that natural gas falls this time of year as traders start to price in the idea of less demand for heat in the United States and, of course, Europe. The temperatures are starting to work against the natural gas markets, and this is my main focus. Furthermore, there are concerns also at this point that the economy may be slipping into a recession in the United States and that will be pretty detrimental to natural gas as electricity production may be less.

The 200 day EMA sits just below, so that does offer some support. But between the uptrend line that is now a resistance barrier and the $3.50 level, I think it is a bit difficult for natural gas to fight the season, and therefore I still like the idea of fading short-term rallies. And on a breakdown below the candlestick from the Wednesday session, we could very well start dropping towards $3.00. This is an area that I think will continue to be very important overall, and therefore I will be watching it closely.

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