Natural Gas Price Outlook – Natural Gas Continues to Build Flag Pattern

Natural Gas Technical Analysis

The natural gas market initially tried to rally a bit during the trading session on Tuesday but gave back a little bit of the gains. Really at this point in time, though, I think we’re more or less sitting still right around the $3 level.

If you look at the chart, it does not take a lot of imagination to see a bullish flag. So, I think that’s what the market is banking on. If we can break out to the upside, the $3.15 level will be an area of resistance. But once we clear that, this thing could take off to $4. Short-term pullbacks at this point in time should end up being buying opportunities again, as the continuation of consolidation would make a certain amount of sense.

Keep in mind this time of year is typically very bullish for natural gas, so I don’t have any interest in shorting the market regardless. Quite frankly, it’s not until we break down below the 200 day EMA, right around the $2.50 level that I’d be concerned about the trend at all. We don’t have the cold weather in the Northeast and part of the United States quite yet, but it is coming and sooner or later demand will pick up, it will be a sharp breakout, and then we fade into spring. It happens every year.

Hurricane season did put a little bit of spice into the market, if you will, but that has come and gone without disrupting too much in the way of supply and production. So, with that being said, I think you have to look at this as a buy on the dip market. And therefore, I’m looking for value underneath to take advantage of, especially near the 50 day EMA or right around the $2.75 level, if we even get that opportunity.

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