Natural Gas Price Outlook – Natural Gas Trying to Find a Floor on Monday

Natural Gas Technical Analysis

The natural gas market is currently sitting just above the $4 level, an area that I think will attract a certain amount of attention as it is a large, round, psychologically significant figure in an area that, quite frankly, has been important multiple times.

We’ve recently seen a pretty significant plunge in the price of natural gas, which is a bit surprising this time of year, but the drawdown was much lower than anticipated about a week ago, despite the fact that the weather in the United States is extraordinarily cold. In fact, so cold that there are actual warnings out there. But until we get the drawdown of supply, people won’t really care.

Key Moving Averages and Market Balance

When I look at this chart, it’s obvious that we’re hanging around the 50-day EMA as well, and that, of course, is something that people will pay a certain amount of attention to. The 200-day EMA is all the way down at the $3.60 level, and we could find our way down there, but the last couple of days certainly look as if they’ve seen a little bit of stabilization right here around the $4 level. So, I do like the idea of this market balancing. I think it offers a way to play a continuation of the cyclical trade, which, of course, is bullish this time of year, and could send this market all the way to the $5 level given enough time.

But as we roll into the January contract here in the next handful of sessions, it’ll be interesting to see what people think at this point in time about demand. Going forward, one would assume it should be fairly strong. So I still am a buy-only trader.

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