Natural Gas Price Outlook – Natural Gas Falls Hard on Tuesday

Natural Gas Technical Analysis

The natural gas markets fell pretty significantly during the trading session on Tuesday in the early hours as we continue to see pretty significant volatility as the area above the $4 level continues to be a major area of concern. All things being equal, this is a market that has been very in tune with the colder than usual temperatures in the United States and of course, the idea of the Europeans having to import natural gas from the United States.

The $3.50 level underneath is more likely than not going to continue to be an area that I think offers a bit of a floor, especially now that the 50-day EMA is racing toward there. The market turning around is pretty much what I’m expecting, but I would let it bounce first. It’s not necessarily something that you want to chase. Natural gas can get really dangerous at times.

Keep your position size small. Recognize that the markets can be very violent this time of year based on next week’s weather patterns. But also recognize that we are getting somewhat close to the end of the winter trading season when futures traders will roll over. So, for example, the February contract is getting ready to roll over to the March contract in the futures market.

So, this is why I think, and this includes CFDs, I think that if we get some type of bounce here, it might be the last one, maybe the second to last one that we get for the season. Remember, this is a very cyclical market. So, barring some type of strange turn of events, I think a bounce is likely playable but I’m not getting into longer term investments at this point.

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