Natural Weekly Price Outlook – Natural Gas Gives Back Gains

Natural Gas Weekly Technical Analysis

The natural gas market has rallied a bit during the trading week, but gave back all of the gains as well. It looks like we might end up finding a bit of a shooting star. And with that being on the chart suggests that maybe we could drop a little further. I think that’s possible, although I think it’s somewhat limited, the downside that is.

The $2.50 level, I think, is very difficult to break below. And we are, at the end of next week, rolling over to the November contract. So, what we might see is a little bit of a dip at the beginning of next week and then a jump as you price in the next contract.

Once we get to November, generally speaking, prices start to look like they will firm up a bit in most years. Definitely in the December contract, because then you’re starting to talk about cold weather in the United States, and more specifically, the Northeastern part of the United States, which uses a ton of natural gas. If we break above the top of the candlestick for the last two weeks, that’s a positive sign as well. And that means we might be ready to go to the upside right away.

In that environment, you could get a move to the $4 level eventually. It’s not something that happens quickly. Keep in mind that the contract rolling over at the end of the week will cause a little bit of bizarre price action from time to time as traders roll over their positions. But as a general attitude of the market, most of the time you’re looking at starting to see a little bit of positiveness right around the next couple of weeks. And there is a trend line that I can draw on the chart that could also offer support.

On the daily chart, there’s a little bit of a gap near $2.75. I don’t think it’s out of the realm of possibility that we fill that gap and then turn around. We’ll just have to wait and see, but I’m less bearish now, mainly because of the time of year.

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