Natural Gas Price Outlook – Natural Gas Attempts to Stabilize on Tuesday

Natural Gas Technical Analysis

Natural gas has opened higher during the trading session on Tuesday, as it looks like we are in fact going to try to bounce a bit from the crucial $3 level. All things being equal, this is a market that I think continues to see a lot of downward pressure, but we are probably oversold in the short term at the moment. And therefore, it makes a certain amount of sense that we might see this market bounce a bit.

The natural gas markets, of course, will continue to focus on the fact that warmer temperatures are coming to the United States and, of course, Europe. And it will bring down demand. If we were to get a bounce from here, I’ll be looking to fade that as well. I think this is just a short-term technical bounce as we try to perhaps recapture the 200-day EMA or at least test it for resistance.

Keep in mind that natural gas has a couple of times a year where it gets really weak. And this is one of them because there’s no heating demand or very little, but there’s also less electricity demand because nobody’s running their air conditioning either. So, we’re in that in-between period. Furthermore, there are concerns about a recession in the global economy and most certainly in the U.S. economy. And that will have a major influence on whether or not electricity demand will peak or decline.

I think at this point in time, there are too many things working against natural gas to consider buying it. So, I look at this balance as an opportunity to fade the rally on the first signs of exhaustion yet again. I’m hoping that the market can get closer to the 200 day EMA before I short it, but we’ll have to wait and see. A breakdown below the $3 level opens up the trapdoor down to the $2.55 region.

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