Natural Gas Weekly Price Analysis – Natural Gas Choppy for the Week

Natural Gas Weekly Technical Analysis

The natural gas market has been all over the place during the week, but still cannot get itself above the $3 level. That’s not a huge surprise, we’re in what is known as shoulder season, meaning that we are in between major demand time frames.

So, with that, you have to keep in mind that winter in the United States drives up a lot of demand for heating, and that generally means natural gas, and to a lesser extent, heating oil and electricity. That being said, natural gas demand just skyrockets at times when it gets really cold in America, but during the time between extreme cold and extreme heat waves, there is a significant drop off in demand and that’s exactly where we’re at.

In fact, we’re probably 2 months from the first real heat wave of the summer. That will cause a spike as well, but those are very short-lived; they tend to be even more short-lived than cold snaps. So, this time of year, I find it fruitful to fade short-term rallies and that has worked this past week.

Technical Resistance and Seasonal Outlook

I think the $3 level continues to be a major barrier, and it’s probably worth knowing that the 50-week EMA has just crossed below the 200-week EMA as well, although with the seasonality of these markets, even that is kind of an afterthought.

I think that the general target right now is about $2.50, we could go down to the $2 level, we’ll just have to wait and see, but right now, I’m not really looking for anything lower than $2.50. Every time this market has a short-term rally, I fade it with a small position, just simply padding my account for a better return for the entirety of the year.

It’s small, little short-term trades for me, the weekly chart shows the problem with the $3 level very clearly, so that is my line in the sand.

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