Natural Gas Price Outlook – Natural Gas Looks to Drop

Natural Gas Technical Analysis

The natural gas market initially tried to rally early on Tuesday, but it seems like the market is struggling with the 50-day EMA and this major area of confluence. The uptrend line from previous trading now offers resistance right along with the 50-day EMA. And we also have to look at this through the prism of the 38.2% Fibonacci retracement level being major resistance as well. This is an area that I have seen important in several times in the past as well.

So, with that and the fact that this is a cyclically negative market, I think it makes a lot of sense for natural gas to continue dropping. The $3.50 level right around the 200-day EMA offers the initial potential support and target. But if we break down below there, it wouldn’t surprise me at all to see natural gas drop down to the $3 level, an area that has been important more than once.

Ultimately, this is a market that also has a lack of heating demand coming into the picture and of course, possibly a recession, which will drive down demand for electricity production. So, these are things that work against natural gas over the longer term anyway. So, with this being said, I like the idea of assuring this market, but I recognize natural gas is an extraordinarily volatile market. So, you must be careful with it, as it can damage your account quickly if you are too levered.

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