Natural Gas Price Outlook – Natural Gas Continues to Rally

Natural Gas Technical Analysis

The natural gas markets filled the gap a couple of weeks ago, and now we are challenging the $3.50 level. The $3.50 level has been important multiple times in the past, and this time probably won’t be any different. Quite frankly, we are late enough in the season that I’m not necessarily looking to buy natural gas, although I freely admit that it could go higher. What I’m looking for are signs of exhaustion that I could perhaps start shorting. I don’t necessarily like trading natural gas this time of year as much as I did, say, two months ago because there is a natural proclivity for the price to go higher as demand picks up.

The problem now is that in the northeastern part of the United States weather’s going to become extraordinarily unpredictable. That’s generally the case as we head into spring. We are expected to see colder temperatures over the next couple of weeks, so we may get another pop higher. And I suppose if you want to sit and babysit your trade, you could perhaps try to get long, but for myself, why I’m just going to wait for it to rally a bit, show a long wick and start shorting. This is a very cyclical market, and I just don’t see how that would change this year.

So, I’m looking to take advantage of the end of the cycle. And then once that’s done, I’ll take my profit and probably step away for six months. Heat waves in the United States in summer can drive the price back up, and that’s a case by case basis, but as far as the overall attitude of the market, it’s very quiet most of the year. It’s basically a wintertime contract, and it is worth noting that we are already in the March contract, and before you know it, here in about two weeks it will be in April, really is when temperatures start to calm down in America, so I think this might be your last hurrah for the year.

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