Natural Gas Price Outlook – Natural Gas Continues to Eye Weather in Northeastern US

Natural Gas Technical Analysis

Natural gas has rallied slightly during the early hours here on Tuesday. But really, we’ve got a situation where the market is trying to squeeze a little bit higher, which makes sense considering the time of year. After all, the Northeastern part of the United States demands a lot of natural gas in the winter to heat homes, and we are in the midst of that, of course. It has been colder than usual early in the winter, so it’ll be interesting to see how this plays out over the long term.

That being said, it’s also worth noting that natural gas is abundant overall, and therefore the US demand will be temporary and then we’ll sell off again like we do every year. In the short term, I believe that the $3 level is a significant support level, especially now that the 50 day EMA is closer to the $2.83 level and rising.

Above, we have the $3.40 level offering a significant amount of resistance and if we can break above there, then it’s possible that opens up the possibility of the market tackling the $4 level, maybe even higher than that. I do expect a lot of volatility in the short term, so position sizing as usual will be crucial, and I would not get a highly levered at this point. If we were to break down below the 50 day EMA, that would be abnormal, and it would be a very negative sign this time of year.

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