Natural Gas Price Outlook – Natural Gas Continues to See Volatility

Natural Gas Technical Analysis

The natural gas markets initially gapped lower to kick off the trading session on Tuesday but have turned around the show signs of life again. That being said, this is a market that I’m watching with great interest due to the fact that we are getting close to the end of the winter season and therefore the high demand season. Granted, right now the United States is getting more cold weather, but we are getting close to the time of year where heating demand drops off a cliff.

With this being said, the $3.50 level underneath will be worth watching because we have the 50 day EMA sitting there as well. Any move below that almost certainly sends the market down to the previous uptrend line somewhere closer to the $3.10 level.

You will then start to be talking about the 200 day EMA in that same neighborhood as well. If natural gas markets continue to rally from here, I’ll just simply wait and start shorting the first signs of exhaustion. Ultimately, this is a market that I think has already peaked or is in the process of doing so. And therefore, I’m looking to short it as demand falls off of a cliff. This is just a cyclical trade.

This is something I do every year. I’ll be the first to admit that the first time you try it generally doesn’t work out, but eventually it works out really well. It’s one small loss, another small loss, and then a huge win. That’s the same way on the way up when temperatures get colder, sometimes you get a couple false starts, and then the next thing you know, you’re riding it for a huge move.

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