Natural Gas Price Outlook – Natural Gas Continues to See Overhead Resistance

Natural Gas Technical Analysis

The natural gas markets have risen just a bit during the trading session on Monday morning, but really at this point in time, the most important thing to pay attention to would be the $4 level. The $4 level, of course, has a lot of psychology attached to it. And therefore, you would think a lot of market memory as it had previously been support. If we break down below the lows of the Friday session, that’s actually breaking the back of a hammer. And that is a very negative turn of events. In that environment, you would have the market looking more likely than not to get to the $3.50 level.

If we turn around and break above the $4 level, then the $4.20 level ends up being a bit of a target. The market will remain volatile, but you should keep in mind that during this time of year natural gas typically does lose some strength, mainly due to the fact that demand will be dropping. And therefore, I think you have to pay close attention to storage numbers as they will start to accumulate more natural gas in storage at this point.

Ultimately, this is a market that I think is a fade the rally type of market, and it is a cyclically negative time of year, as temperatures in America are going to start rising, and therefore drive down a lot of the demand for natural gas, at least until we get really hot days in the summer, and that’s several months out. So, we are starting to price in the refilling of the tanks, if you will, and of course, the dropping of demand going forward.

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