Natural Gas Price Outlook – Natural Gas Gaps Lower

Natural Gas Technical Analysis

The natural gas market gapped lower to kick off the trading session on Monday, only to turn around and bounce again. We are hanging around the 200 day EMA and if we can break down below the bottom of the candlestick for Monday, opens up the possibility of a drop down to the $3 level, which is what I see happening sooner or later. We will just have to wait and see whether or not we actually get that opportunity to start shorting because quite frankly, we could just bounce back into the same noise that we had been trading for a while.

I do believe ultimately this is a situation where if we rally and show any signs of exhaustion, I’m more than willing to start shorting. The $3.75 level above is a bit of a barrier and breaking that of course would attract a lot of attention also. Ultimately, I am bearish of natural gas as heating demand is going to fall off of a cliff. And although it’s been hot in America, electrical demand will drop a bit when temperatures normalize a bit.

So, at this point in time, I think we’re more or less range bound with a downward tilt. And that’s exactly how I’m looking at it. Late in the third quarter, we’ll start to see buyers coming back into the market, preparing for winter. But as things stand right now, we do not have that tailwind. So again, I prefer to short the market after signs of exhaustion in a short-term rally.

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