Natural Gas Price Outlook – Natural Gas Continues to Consolidate

Natural Gas Technical Analysis

Natural gas markets are up about 3% in pre-market trading on Wednesday before the futures markets of course have come into full effect. But at this juncture, I think we’ve got a situation where the market continues to go back and forth as it tries to sort out what to do next. This is a market that’s been very noisy as of late, and it is worth noting, though, that there is a lot of cold weather in the United States. As somebody who lives here in that part of the country, I can assure you, natural gas is in demand.

That being said, natural gas is also driven by the futures market, even if you are trading a spot CFD and they are already looking out several weeks ahead. And as a result, there’s a little bit of stagnation. I also recognize the fact that the market did shoot straight up in the air, so we may have to work off some of the excess froth anyway. The $4 level above, I think, offers a little bit of a barrier from psychology and options standpoint as options traders of course are attracted to these big numbers.

Underneath we have the $3.40 level, which has been important multiple times. And in fact, previously was significant resistance. So, market memory dictates that it should be support, at least in theory, on the way back down. The 50 day EMA is right around the $3.22 level and rising. So, it will be at $3.40 before you know it, adding more support to that area. I think this is a market that has another surge higher or maybe even two of them between now and when we start to see sell-off pressure due to spring weather coming into the picture.

So, I am looking at short-term pullbacks as buying opportunities, but I would caution you to be a little bit nimbler this time of year, because although it’s just the, basically the middle of January right now, futures markets are already starting to look towards the possibility of a shortened winter, although that all comes out in the weather reports. So, it does make this a naturally volatile market.

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