Natural Gas Price Outlook – Natural Gas Continues to See Volatility

Natural Gas Technical Analysis

Natural gas is down almost 5% before New York opens as the electronic overnight trading has reacted to warmer than anticipated forecast coming out of the northeastern part of the United States. This opens up the possibility of the spot market dropping down to the $3.40 level, which is a major area of previous resistance and should at least in theory be support. That being said, it’s worth noting that the latest futures contract did roll over on Tuesday.

So, you might have a little bit of a readjustment with your CFD broker. Beyond that, it’s also worth noting that the futures market might very well end up looking to the spring sooner than you expect. So, make sure to pay attention to what the forward contract is as we roll over into the February contract. Every year I get correspondence from retail traders who don’t understand why in the end of January, all of a sudden natural gas plummets.

And the reason of course being that your CFD is based on the Henry Hubb contract, which is based on American usage, which plummets in March, sometimes April, just depending on how late the winter season runs. So far, it’s been a fairly cold winter. And that’s part of what you’re seeing here. But sooner or later, the calendar flips over and we start heading into spring. So with this, I think we have further to go to the upside in the short term, but immediate term, we probably need to pull back and reset at that breakout point closer to the $3.40 level.

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