Natural Gas Price Outlook – Natural Gas Continues to Chop

Natural Gas Technical Analysis

The natural gas market has dropped a bit during the early hours on Tuesday as we continue to see a lot of noisy and choppy behavior. This does make a certain amount of sense because we are seeing a lot of cold weather issuance in the United States and I can tell you as somebody who lives in that part of the world, it is very cold right now. However, this is also a temporary thing. So, it becomes part of the cyclical trade. That’s really all it is.

Short-term pullbacks, I do think, have plenty of support underneath, especially near the 3.40 level. But I also would watch the four handle, because if we can break above there, then it’s likely that natural gas will go racing higher, perhaps to 4.5, maybe even 5.00. So, with all of that being said, I think this is a market that you remember the dips as buying opportunities, but you do have to pay attention to that 50-day EMA right around 3.20. As that rises, it creates a higher floor in the market. But sooner or later, we start to think about the idea of winter being over.

Remember, even though you’re trading spot natural gas, most CFDs are going to be some type of mix of futures contracts. And a lot of times that means that when futures traders start to focus on spring temperatures, and they’ll do that before spring, you’ll see prices drop suddenly. So, the range that we see during winter is pretty wild, but it ends quicker than most people would expect. I do think that we get another spike higher between now and the end of winter, but right now we are in the process of stabilizing, so therefore it’s more buy on the dips for short term gains.

For a look at all of today’s economic events, check out our economic calendar.