Natural Gas Price Outlook – Natural Gas Recovering on Tuesday

Natural Gas Technical Analysis

The natural gas market has rallied a bit in the early hours of Tuesday as we continue to fight to maintain the $4 level as a major support level. Ultimately, if we can break higher, then you have the 50-day EMA and the bottom of the Friday session that both come into play for resistance, trying to fill the gap, if you will. If we can break above there, then we could go looking at the $4.60 level. This time of year is typically very important for natural gas as it is a major demand time, and cold temperatures in the United States, of course, are a major influence.

Cyclical Trade

This is a cyclical trade that I take quite often. And it is worth noting that Monday was when we rolled over into the January contract. So, we’ll see how that plays out. Typically, it’s very bullish. I do think that we could get to the $5 level. We just need some type of winter storm to hit. Short-term pullbacks should continue to be buying opportunities, and I think the 200-day EMA, which is basically at the $3.64 level, is your floor.

All things being equal, I don’t think we break down below there for quite some time. And I look at this as a sign that we are trying to recover. The problem, of course, is that we are looking at New Year’s coming up, so it’s a little thin. I don’t know how reliable it is, but it does go with the overall trend and cyclicality of the market. So, I’m willing to take a shot at this, but you have to keep your position size reasonable.

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