Natural Gas Price Outlook – Natural Gas Continues to Look Heavy

Natural Gas Technical Analysis

The natural gas market has shown itself to be a little bit negative in the early hours of Tuesday, as we are sitting just above the crucial $4 level. The $4 level, of course, is an area that I think a lot of people will be paying close attention to, but it has been sliced through multiple times. So, although psychologically important, it may not be as structurally important as it once was. Because of this, I think we’ve got a situation where we will be watching the 50-day EMA underneath, which is near the $3.91 level. And if we break down below there, then we could see a little bit of momentum back into the market.

Therefore, I think we have a situation where traders will continue to look at this through the prism of whether or not we really start to sell off for the cycle. The cycle, of course, being the fact that temperatures in the United States and Europe both start to warm and of course demand for heating at least will drop. With that being the case, I think you have to be cognizant of the fact that we could very well see that.

This is a trade I take every year, and it does tend to be very noisy, and you do get stopped a few times, but eventually when you fall, when the temperatures finally overwhelm the demand for the season, then you get a pretty significant drop. It would not surprise me at all to see natural gas reach towards the $3.50 level, but it’s going to be a very noisy affair on the way down there.

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