Natural Gas Price Outlook – Natural Gas Drifts a Touch Lower Early on Friday

Natural Gas Technical Analysis

The natural gas market saw a bit of a gap higher to kick off the trading session on Friday, only to turn around and start drifting lower. With that being the case, the market is likely to continue to see a lot of volatility and choppiness right around the $4.40 level. At this juncture, traders are questioning whether or not natural gas jumped too much as we rolled over into the December contract. I certainly think that is the case, and it would not surprise me at all to see a pretty deep correction before it’s all said and done.

Yes, we are starting to see colder temperatures in the United States, and of course, this is the December contract. So, I don’t want to short natural gas, but I don’t want to chase it at these high levels either. I need to see some type of pullback in order to offer enough value to put my money at risk. The gap, of course, was monstrous when we rolled over, so in theory, you could see a move all the way down to $3.45 to fill that gap.

However, I don’t think we get all the way down there. What I think will happen is some type of significant pullback and then a bounce. Once we start to bounce, then I think you’ve got a situation where you can buy the market on the right-hand side of the V, opening up the possibility of a continuation of the overall uptrend. Demand will rise, and I do think we will go much higher, but we’ve gotten all the way up here way too quickly. A little bit of patience will be needed.

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