Natural Gas Price Outlook – Natural Gas Continues to Test a Major Barrier

Natural Gas Technical Analysis

The natural gas market has gone back and forth during the early hours on Friday, with the $3.50 level offering a certain amount of resistance. After all, the $3.50 level is a large round psychologically significant figure, but it’s also an area where we have seen a lot of support and resistance. The 50 day EMA sits above offering resistance. And we also have the uptrend line that we had previously been bouncing off of, and now it looks like it’s going to offer resistance.

If we fall from here, then the market could go looking to the 200 day EMA underneath, which is near the $3.25 region. If we break down below that, then I think natural gas really could start to fall apart. Now keep in mind that natural gas typically doesn’t do that well this time of year, but we have fallen so far, it does make a certain amount of sense that we had a relief rally.

At this point in time the market is definitely in an area where I’d be looking to short, but we need to see some type of exhaustion or rollover to start selling. After all, demand for natural gas is going to start falling due to the fact that the market is going to see a lot less heating demand. And if we do see a scenario where the recession grips the world, it would call for a lot less natural gas demand from an industrial standpoint as well.

So, there’s a lot of things working against natural gas at the moment and therefore I’m looking for selling opportunities, but we need a negative candlestick or a long wick on a positive candlestick to start shorting. We just aren’t there yet, but we are right where we need to see it.

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