Natural Gas Price Outlook – Natural Gas Continues to Rally

Natural Gas Technical Analysis

The natural gas markets have rallied again pretty significantly in early hours trading on Wednesday. But at this point in time, we are getting ridiculously overbought again, especially considering the time of year. So, it’ll be interesting to see how this plays out. I actually just read a piece suggesting that if the Ukraine war ends, it will drive down the price of natural gas. I don’t know. That’s a longer term thing, but it is something that traders are starting to price in now.

That being said, the short-term momentum has been which makes sense considering that the weather in the United States is very cold, Canada as well. But this is a temporary thing and like I’ve been saying for a couple of days now, I’m looking to short this. I don’t want to chase this. It’s very difficult to do that. We are in that weird time of year where we are flipping over from winter concerns to spring and in spring we’ll see a absolute collapse in demand.

So, at this point, it’s just a wait and see, but it is worth noting that we are in an area that could be thought of as a double top. We’ll just have to wait and see how this plays out. I think if the market breaks back down below the $4 level, I’ll start to short it. I do not like shorting natural gas, but I try to do it once a year as we leave the cold weather temperatures. Right now, though, this looks very much like a market that is moving on the next two days weather forecast, which makes it very difficult to trade.

If we break out to a fresh new high, well, then we could be talking about an air pocket all the way to $5. I don’t think that happens. But in all fairness, I didn’t think we would be trying to test the high to begin with. So, we’ll see if we break back down below four, I’ll short it otherwise may be forced to reevaluate the entire situation. Maybe buy it on breakout, but I don’t like this type of momentum because it normally ends in tears. You normally end up chasing it and losing money. So, I’m watching this very closely, especially around that $4 level.

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