Natural Gas Price Outlook – Natural Gas Rallies Only to Pull Back

Natural Gas Technical Analysis

Natural Gas has rallied pretty significantly during the early hours on Friday, but then gave back those gains to show signs of exhaustion and hesitation. The area above the $4 level will continue to be important. And of course, $4 is a large round psychologically significant figure that attracts a lot of headlines in and of itself. You’ll notice that we got right to the top of that blowout candle to the downside that started the drop down to the $3 level.

Now we have returned here, and this would be what some traders shutter to use this term, a fair value gap. And now it looks like it is holding. I would call it supply. It’s the same thing. It’s literally the same thing. So, the supply here, right around $4, is going to be difficult to overcome. So, if we do start dropping from here, you would expect a move down to $3.85 probably pretty quickly and then after that I moved down to the 50-day EMA.

It’s the wrong time of year for natural gas to be this bullish, but there are a couple of extraneous reasons right now that are causing some issues. We are ready to kick off a heat wave here in the eastern part of the United States, which is supposed to last three or four days, so it’s a short-term effect.

And then you have the Iranian natural gas fields being threatened. That of course, probably is a little bit more important. Ultimately though, this summer year demand for natural gas, burning natural gas for electricity to power air conditioning is a little bit more tampered. So, we’ll see, we’ll see how this plays out, but I’m looking to fade exhaustion as I’ve been saying for a couple of days here as we took off. It looks like we’re starting to get it. This is probably more or less a decision to be made on Monday morning though.

For a look at all of today’s economic events, check out our economic calendar.