Natural Gas Price Outlook – Natural Gas Looks Attractive

Natural Gas Technical Analysis

The natural gas market rallied ever so slightly during the early hours of Thursday as we are now back above the $3 level. All things being equal, this is a market where short-term pullbacks will end up being an opportunity to take advantage of the larger move to the upside. In general, I think this is a situation where the market is going to try to get back to the $3.40 level, which is a massive barrier. If we could break above there, that would obviously be a huge deal.

But right now, I think we’ve got a scenario where we are just simply trying to get back into the previous consolidation between $3 and $3.40. Temperatures in the Northeastern part of the United States, of course, have really plunged, and therefore, it’s not a huge surprise to see that natural gas is a little bit elevated. As most traders know, there is a cycle that a lot of industrial users of the futures markets follow every year.

Ultimately, this is a market that if we did break down below the hammer from the Wednesday session, we will more likely than not reset and start looking at the 50 day EMA. However, this time of year is generally a very bullish time, and therefore I think a lot of people are just simply playing the cyclical trade as well. However, keep in mind that the volatility in this market is very dangerous, so position size is always important in this market as the swings can be violent at times.

For a look at all of today’s economic events, check out our economic calendar.