Natural Price Forecast – Natural Gas Continues to Build Its Floor

Natural Gas Technical Analysis

The natural gas markets have gone back and forth during the early hours of Friday, as we are trying to figure out whether or not we can sort out whether this is going to be a longer term floor. I think it does but I also believe there is a situation where people continue to look at the $1.50 level underneath as a major floor. The major floor, of course, is an area that has held up multiple times over the last several years. If we were to break down below the 1.50 level, then we could see the market really fall apart.

But at that point, I also believe you would have some type of like capitulation phase, because at that point drillers will step away, they just won’t produce. And if that’s going to be the case, then that obviously has a major influence on what would happen next. At this point, I think we’re just going to continue to grind basically between 1.60 and 2.00 above.

And ultimately, I do think we break the $2 level, but it is going to take a certain amount of effort. Perhaps it’s something that happens late this year with the seasonal effect because we are heading into one of the slowest times of year for this market at extreme lows. I’m invested via ETF because I don’t necessarily see any reason to apply leverage.

If you have the ability to open up a small CFD position, that might be a way to play this, but obviously you have to watch out for any swap paid.

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