Natural Gas Price Outlook – Natural Gas Continues to See a Ceiling

Natural Gas Technical Analysis

The natural gas market gapped higher to kick off the trading session on Monday, jumped to test the previous uptrend line and then started to fail almost immediately. This tells me that there are probably quite a few sellers out there waiting to see whether or not we can continue the overall downtrend. All things being equal, I think this is a situation where traders are going to look for reasons to sell, as this is a market that at this time of year typically suffers from a lack of demand.

The heating situation in the United States obviously isn’t a big deal right now. And that, of course, means that demand will drop. The thing that’s made this year a little bit different is the fact that the Europeans are not buying Russian gas. So that has kept this market a little bit more elevated. In general, this is a market that I think that people are looking to push back down to the $3 level, but it may take some time to get there.

If we were to break down below the $3 level, then the bottom falls out. But right now, that’s my target. If we were to break above the $3.60 level, then we may rally to the $4 level. But I don’t like rallies at this point in time. And I am looking for an opportunity to short this market on signs of exhaustion like we are getting in the early part of Monday.

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