Natural Gas Price Forecast – Natural Gas Continues to Grind Higher

Natural Gas Technical Analysis

Natural gas markets have rallied a bit during the early hours of Thursday trading to reach the 200 day EMA, but also are now in an overbought condition when it comes to the relative strength index. In other words, I think we desperately need a pullback.

There are a lot of concerns about geopolitics when it comes to natural gas, but quite frankly, now that we’ve broken out, I’m looking for pullbacks to add to an existing ETF position. I have taken a little bit of profit, so I’m going to rinse and repeat. And with a lack of leverage, I don’t have to worry about trying to get the timing quite right levered to CFDs is a very difficult proposition because what most of you don’t understand is that you’re trading US natural gas. So, unless you are a meteorologist that understands a lot about Northeastern United States weather patterns, which I can assure you living here that they are erratic, there isn’t a whole lot of hope from a timing standpoint.

Natural Gas markets tend to move on fundamentals more than technicals, although technicals can help. It’s in that spirit that I believe the market’s overbought, but you can see it continues to go higher. We had reached a point where drillers in the United States were simply starting to lose money, and eventually that has to come to an end, and that’s what we’ve seen, I think, more than anything else.

If we can get a pullback anywhere near $2, I’d be interested in getting more of my ETF involved. We’ve had some questions about the ETF I use. It’s called UNG. It’s listed in America. I don’t know about other countries. You have to have access to US stocks or ETFs, but there probably are ETFs in European countries, Asian countries, whatever, that deal with natural gas.

But make sure it’s based on the Henry Hub contract and not something like Dubai because that might have a completely set, different set of fundamentals pushing it. The Henry Hubb is by far the biggest contract in the world but it’s not the only one, so you have to be very cautious with that. Again, I’m a buyer of dips in the ETF. I don’t care about the leverage. This is a small part of my portfolio. Quite frankly, when I trimmed it, it wasn’t that astonishing to me.

This thing could rip to $3. That really isn’t going to change my life either, but it does add to the pile. And at the end of the day, that’s all we’re trying to do.

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