Natural Gas Price Outlook – Natural Gas Continues to Threaten the Downside

Natural Gas Technical Analysis

The natural gas market continues to hover right around the $3 level, and it looks as if we are going to do everything we can to break down. That being said, a little bit of a short-term bounce is possible here, but I think that bounce is something that you’ll be looking to sell into. After all, this is a market that has a very major cyclical problem in the form of a lack of heating demand.

With this, I think the 200-day EMA above, which is near the $3.30 level, is your short-term ceiling. If we break down below the lows of the last couple of days, then I anticipate a move to the $2.80 level followed by $2.50. Natural gas has this problem every year when people stop heating their homes with it, and it’s not quite hot enough to run a lot of air conditioning. Furthermore, it is worth noting that there is the possibility of a recession. So, it could have a detrimental effect on the demand for natural gas as well. After all, in a recession, less electrical demand from industry has an effect also.

So, with all of this being said, I don’t see a situation where I would be a buyer of natural gas. Typically, I wouldn’t be this time of year anyway. And I’m looking for rallies to sell into as we have clearly broken down fairly significantly. I have no interest in trying to get long of this market without some kind of external event.

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