Natural Gas Price Outlook – Natural Gas Continues to Look Weak

Natural Gas Technical Analysis

The natural gas market continues to hang around just below the $3 level as we continue to see negativity in this market. That makes a lot of sense to me because quite frankly, this time of year demand for natural gas typically drops. Most Americans are not heating their homes or if they are, they’re only doing it a couple hours a day. And that has a major influence on what happens with this contract.

Furthermore, it looks as if the situation in Europe should improve as well as far as natural gas is concerned. So external pressures such as tariffs and things like that may not come into play as much as once thought. And at this point in time, we also have to keep in mind that it’s a seasonal trade that heating demand drops. Therefore, most traders look to start shorting sometime in March anyway.

Furthermore, if we experience a recession in the United States, you have to keep in mind that natural gas is typically used to produce electricity in multiple places in America. And if we, in fact, are going to see the demand for electricity drop due to a recession, that’s negative as well. So, with all of these things tied together and the fact that we are below the obvious trend line from before, and of course, the 200 day EMA has me thinking that natural gas has further to go to the downside, perhaps as low as $2.40. We’ll just have to wait and see. Keep in mind that a lot of damage has been done, so to expect an explosive move to the downside is probably a bit much here. Short-term rallies that show signs of exhaustion might be shorting opportunities for most like-minded traders.

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