Natural Gas Price Forecast – Natural Gas Continues to Look For Buyers

Natural Gas Technical Analysis

The natural gas markets have been a bit choppy over the last day or so, and that’s not overly surprising considering that we are so low as far as pricing is concerned. If you zoom out, you can see that over the last several months we have seen a massive spike, mainly due to a heat wave in the United States, and then have since pulled back quite drastically. I do think we’re in a situation where we have to look for some type of reason to get long again, we dropped below the 61.8% Fibonacci retracement level. And that typically means that you are going to see quite a bit of weakness.

At that point, technical analysis somewhat comes out of the picture. I would point out that the $2 level is an area that you should be watching, as it is a large round psychologically significant figure and an area we had bounced from. That being said, I don’t like the idea of using a lot of leverage in natural gas because quite frankly it is so volatile.

So, on dips I am a buyer of natural gas but through an ETF. In the United States we have one called UNG, but there are some other ones out there, but I would use the non-levered ones. The market generally will rally late in the summer, early fall, predicting the cold weather demand when we get to colder temperatures in the year, and that’s just simply what this play is at this point.

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