Natural Gas Price Outlook – Natural Gas Drifts Early on Monday

Natural Gas Technical Analysis

The natural gas market has gone back and forth during the early hours on Monday as we continue to hang out just below the $3 level. The $3 level is a large, round, psychologically significant figure that a lot of people will be paying attention to and an area that previously had been support. So, at this point, it makes a certain amount of sense that it offers resistance. All of that being said, you have to keep in mind that this time of year is a little bit of a market influx because we are watching very closely temperatures change down the road.

We are trading the October contract. October starts to see some cooler weather in the United States. It’s not necessarily the pinnacle of demand by any stretch of imagination, but I think given enough time, we probably have a scenario where traders are going to be looking at this, trying to get a handle on when we’re going to start pricing in colder weather, that’s when natural gas will really take off.

In the short term, I think we probably still could very well see a little bit of a dip. Maybe we dropped to fill the gap underneath that formed a couple of weeks ago, meaning somewhere around $2.70. But we are getting closer to the end of the poor season for natural gas, and therefore we are probably in the middle of building a base. This tends to be a very noisy time. But ultimately, once we get that cyclical trade going to the upside, natural gas can really take off.

The biggest thing here, I think you’re going to have to be paying close attention to is your position size. I know a lot of traders that have gotten wiped out trying to play this trade and not letting the market tell them when it’s time to start buying. Therefore, most successful traders I know tend to put on small positions and then add to them as we go along.

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