Natural Gas Price Outlook – Natural Gas Continues to See Choppiness

Natural Gas Technical Analysis

The natural gas market has shown itself to be somewhat resilient near this crucial $3.50 level. And I think that is going to be the main story here, resiliency. The $3.50 level, of course, is a large round, psychologically significant figure that people will be paying close attention to. But I would also bring to your attention that it is where a major trend line hangs out. And just below there, we have the 200 day EMA. The 200 day EMA, of course, is an indicator that a lot of longer term traders will be paying close attention to. And therefore, I think you’ve got a situation where we could see a lot of noise here. Keep in mind that natural gas is going to start to see a lack of demand soon, mainly due to the seasonality, as it is a major component in heating.

It also produces a lot of electricity in the United States as well. So, if the economy slows down, it’s possible that natural gas demand will fall off of a cliff. I’m not necessarily expecting that right away, but I do recognize that we have a situation where natural gas is at a major inflection point that we need to pay close attention to. If we were to break down below the $3.30 level and take out the 200-day EMA, then I think you’ve got a real shot at this market falling even further, perhaps down to the $3 level.

This is a market that is extraordinarily volatile. So, you will have to be very cautious with your trading. You’ll have to recognize that position sizing will be crucial. But I think at this point in time, even if we do rally, there’s going to be a significant amount of resistance above that continues to cause headaches, especially around the 50-day EMA near the $3.82 level. So, I’m looking to fade signs of exhaustion if we do rally from here.

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