Natural Gas Price Outlook – Natural Gas Plummets on Wednesday

Natural Gas Technical Analysis

The natural gas market has fallen about 5% before New York came on board, and it looks like a situation where I just don’t see a reason to jump in on New Year’s Eve and try to pick up cheap gas. I suspect that we could drop the market down to the 200-day EMA or possibly even lower. We might even fill the gap that came about right before the end of October. We’ll just have to wait and see.

This is the time of year cyclically where we are a lot more positive, and I would point out that, being New Year’s Eve, some of this might be simple position squaring. I don’t think there is a new push to make a directional move in this market. But with all of that being said, I am looking for a bounce to buy. Again, I don’t short natural gas this time of year. I just don’t bother with it. Yes, there is money to be made on the downside, but the reality is it’s just easier to go with the cycle.

Technical levels to watch

The colder temperatures in the United States will lift this market sooner or later, but it turns out we had more natural gas in storage than people thought, and here we are. With that being said, the 200-day EMA at the $3.64 level will be an area to watch as it could attract technical traders. Anything below there then probably opens up a move down to $3.45 or so.

To the upside, if we can break above the 50-day EMA, roughly at $4.20, then it opens up natural gas to go higher. In the short term, I would expect a lot of noise. Friday probably is going to be a lackluster, nonsensical day, but you never know, maybe we get a flush lower that we can take advantage of the following week.

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