Natural Gas Price Forecast – Natural Gas Continues to Slump Slightly

Natural Gas Technical Analysis

The natural gas markets have dropped a bit during the early hours on Wednesday as we continue to see a lot of noisy behavior. That being said, the market is also in the midst of trying to break down through a rising wedge on higher timeframes, and therefore I do think that the correction will probably continue. This time of year, is not very good for natural gas, and even though we had a massive heat wave in the United States, the reality is that there’s not really enough demand this time of year typically to keep prices elevated.

If we fall from here, the $2.50 level could be a target. And in that area, I might look to add to my already existing ETF position. I don’t have a lot of leverage on my position right now, just simply because natural gas can’t be trusted with it. I get emails consistently from people who are asking me about trading natural gas, and I always tell them the same thing.

You need to know what’s going on in the weather patterns in the Northeastern United States. You need to understand transmission across lines across the United States. Is there a mechanism for transmission from a storage facility to a major hub that has any issues, for example? You also need to understand storage, whether or not there is over storage or under capacity situation, if it is a situation where you just don’t have enough supply. As somebody who lives in Ohio, I can assure you that being under supplied is almost an impossibility.

So, because of that, natural gas is very difficult to trade with a lot of leverage. The first thing I always say is either use an ETF or use a small CFD position in swing trading. You can’t trade it short-term. I’ve never known a retail trader or professional trader for that matter although admittedly I only know a few energy professional traders that have made a consistent living from trading natural gas on short term charge. Swing trading on the other hand, can make for an excellent investment. And that might be what we’re getting ready to see closer to $2.50. We’ll just have to wait and see but I don’t want to pay $2.70 in summertime when typically, we’re a lot lower.

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