Natural Weekly Price Outlook – Natural Gas Continues to See Barrier Above

Natural Gas Weekly Technical Analysis

The natural gas market has gone back and forth during the course of the trading week as we have threatened the $3.40 level above and the $3 level below. This is a market that is building up pressure to try to break out and I think it makes sense that it would eventually be due to the fact that this time of year has quite a bit more in the way of demand in the Northeast Empire of the United States. After all, you are trading a contract that is driven mainly by the US. If we were to break above the $3.40 level, I think the $4 level is probably the next thing people will be looking for.

Short-term pullbacks will continue to see the $3 level as support and if we break down below there, that might be a bit surprising. At that point, then we may have to go down to the $2.50 level to see any real reason to start buying again. Typically, this time of year, you will see more demand, therefore higher pricing. So, it is a cyclical trade that I get involved in.

I don’t get married to the trade. I don’t necessarily worry about capturing the entire trade. It’s just something that happens this time of year, and therefore it’s worth taking advantage of. Keep in mind that natural gas can be very wild, so you have to be cautious with your position sizing. But at the end of the day, this is normally good for a couple of percent for my total return for the year, almost every year.

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