Natural Gas Price Forecast – Natural Gas Continues to Recover

Natural Gas Technical Analysis

The natural gas markets bounced early during the day on Monday as it looks like we are continuing to see a little bit of recovery. At this point in time, the $2 level I think is going to be very crucial, so pay close attention to it. If we can break above the $2 level, then it is very likely that we go much higher and perhaps even try to go to $2.50 over the longer term. That being said, it is a market that’s beaten down for a reason, quite frankly, there is just simply too much natural gas. But historically speaking, we are at an extraordinarily low level and I do think that you have a scenario where a lot of short covering could come into the picture.

The season isn’t necessarily the strongest one for natural gas, but we have seen such a move lower that it does make a lot of sense that we would see the market bounce rather significantly. The way I plan on trading this market at the moment is to simply let it pull back after this rally and then perhaps get long. The $1.50 level underneath is a major floor in the market going back multiple years so this move isn’t overly surprising. Be cautious, be patient, you probably have a significant amount of time to get involved in this market as it has shown itself to be so negative in such a short amount of time that there’s probably a little bit of a need to catch one’s breath, as it were.

Regardless I don’t have any interest in shorting natural gas at this extraordinarily low level and I will be getting involved with low leverage or the ETF, UNG, which is a way you can play it on the stock exchanges. The biggest take away is not to get overly levered in a market that is extraordinarily volatile and dangerous at times. This is more or less a swing trade opportunity.

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