Natural Weekly Price Outlook – Natural Gas Has a Tough Week

Natural Gas Weekly Technical Analysis

The natural gas market has sold off most of the week, although it is worth noting that on Friday, it was at least trying to stabilize a bit. So, with that being said, when you see the market act as such, it certainly gives you no doubt as to the overall attitude. Unfortunately, at this point, we have the $3 level sitting just below. So, it does offer a certain amount of support.

Because of this, I would be very cautious about trying to short the market here. It isn’t that you can’t do it, it’s just that we have a situation where traders are so overextended that you have to ask the question, do you want to sell directly into resistance? And the answer of course is going to be no.

So, with that, I would anticipate a little bit of a bounce, but I prefer to sell rallies that show signs of exhaustion. We broke a trend line a couple of weeks ago and have cents dropped. I think you probably could see a move back towards the $3.60 level. And in that environment, I’d be willing to sell if we do get the right price action.

If we were to break down below the $2.80 level, then we could have a drop to the $2.30 level. But that’s not my base case scenario. You can, at least in theory, make an argument for a head and shoulders pattern. But the thing here is that the target is $2. I think that’s possible, but I don’t know if we’re there quite yet. So, I prefer to fade rallies that show signs of exhaustion, but below 280, then I’ll start shorting there as well. I have no interest in buying natural gas.

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