Natural Gas Price Outlook – Natural Gas Drops on Rollover

Natural Gas Technical Analysis

Natural gas has gapped lower to kick off the trading session on Monday, slicing through the $4 level. But we are testing that $3.85 region, which has acted as support. We are also in the midst of rolling over into the January contract, which is typically pretty bullish, but temperatures have been surprisingly warm in the United States over the last couple of days. That’s about to end, so we will see if we get whiplash here from the next move higher.

I do favor buying dips, and this does look like a market that is trying to offer value. We will just have to wait and see. The 200-day EMA sits at the $3.63 level, which is right around an area that’s been important more than once. Rallying at this point will have the market challenging the 50-day EMA again at the $4.15 level, and then possibly rising to the $4.50 level. In general, this is a market that I think is looking for a reason to go higher, but it just doesn’t have it at the moment.

Cyclical Trade Technical Analysis

Nonetheless, this time of year, I am only buying. I will short this market eventually, but we are not there yet. We are just trading the January contract. When we start to trade the March and April contracts, that’s where I start to think about that. But as things stand right now, I think the cyclical trade is in play more than anything else.

The noise about AI data centers needing more power, I think, is starting to go away from the market a little bit. It was just a narrative that caught on fire there for a moment. Longer term, sure, it’s a real thing, but right now I think that was overhyped.

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