Natural Gas Weekly Price Outlook – Natural Gas Struggles at High Levels

Natural Gas Weekly Technical Analysis

The natural gas market has gone back and forth during the course of the week, as it looks like we are starting to show signs of hesitation. This makes a certain amount of sense because near the $4.50 level, we saw resistance in March, and now it looks like we could pull back from this area. I suspect that it is the next move, but ultimately, I think you have to look at this through the possibility of a buy-on-the-dip scenario.

The December contract is the one that we are trading with right now, and while that is generally a bullish contract, the reality is that we have gotten way ahead of ourselves. In fact, in the first week we were trading the contract, we were up 30%. With that being said, and with warmer temperatures coming to the United States over the next week or so, the natural gas market is probably due for a pullback.

That pullback should offer value, especially if we can get down to $4 or even better yet, somewhere close to $3.75. Keep in mind, this is a cyclically bullish contract. We are trading in the winter months, and heating demand will continue to rise. So, breaking above the $5 level is a real possibility eventually; I just do not think, at least without some type of massive weather-related event or maybe geopolitical event, that $5 gets violated quickly. I do not think you want that, actually. Short-term pullbacks should end up being buying opportunities. Watch your daily or even four-hour charts for some type of signal of a bounce, and that is what I will be looking for.

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