Natural Gas Price Forecast – Natural Gas Continues to See $2 as an Anchor

Natural Gas Technical Analysis

The nat gas markets initially pulled back just a bit during the early trading hours on Thursday to test the $2 level, only to bounce quite significantly. Quite frankly, this is an area that I think a lot of people will be paying attention to in the spot market, mainly due to $2 being a large round psychologically significant figure. Furthermore, we also have this situation where the traders out there continue to look at this through the prism of a cycle, at least I believe, and therefore we are in the midst of summer, the hottest time of year in the United States. If we get a heat wave that could drive up demand.

Otherwise, natural gas is going to continue to be somewhat limited in its upside. I’ve been building a position over the last couple of weeks, like I did previously, and got out of some of it in the heat wave. But this time I’m building an ETF position in order to take advantage of the spike in pricing later this year when heating demand picks up. All things being equal, this is a market that I think continues to see a lot of volatility and buy on the dip, but I would not get a huge position going anytime soon just simply because the leverage will get you absolutely killed in this market.

However, if you’re willing to be more of a swing trader, you could easily see this market hit $3 sometime this year. And that’s a 50% return on your investment. Not a bad thing at all. You just have to be patient. It happens every year. There’s no real way of predicting exactly when it happens. I know I’m early, but I’m okay with that. An ETF position isn’t going to cause havoc in my account. If you don’t have that ability, then you can use CFD contracts. Just make sure you use very small ones.

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