Natural Gas Price Outlook – Natural Gas Continues to See Buyers

Natural Gas Technical Analysis

The natural gas market gapped higher to kick off the trading session on Friday, but then fell to fill that gap, only to turn around and rally again. Natural gas looks very bullish, as it should. It’s the January contract, and there will be a lot of demand for heating in places like Boston, Philadelphia, and Chicago. So there is a lot of demand out there this time of year, and therefore, prices should increase. It’s a cyclical trade I take every year where I’m a buyer in the winter months, and we are trading the January contract. So obviously there’s a lot to be thought about here.

Seasonal Strength Driving the Move

Short-term pullbacks continue to be buying opportunities, and although I don’t like chasing this market, I think it’s becoming abundantly clear that we’re not going to get a massive drop anytime soon. The $4.20 level would be an area of support I’d be paying close attention to, but if we do break out to the upside, the $5 level could be targeted rather quickly. In that environment, I think you have a lot of resistance just waiting to happen, and I would be very cautious with natural gas in that area because it has been a strong top. Blowing out the $5 level as resistance and going higher would be extraordinarily strong. In that situation, we’re probably looking at a move towards $5.50.

Either way, I’m not a seller of natural gas this time of year. I only buy. I look for dips for value. But also, you have to keep in mind this was a holiday-shortened week as well. So that’s something to think about. Nonetheless, this is a buy-only market. Again, I will not short it and, in fact, probably won’t short it again until we’re trading the April contract.

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