Natural Gas Price Outlook – Natural Gas Gaps Lower to Start the Week

Natural Gas Technical Analysis

The natural gas market has gapped lower to kick off the trading session on Monday and then bounced a bit to show signs of life. At this point in time, I still see a lot of resistance near the $3.85 level, and I am watching that for a bit of a ceiling. If we break down below the low of the Friday candle, somewhere near the $3.63 level, then I think you get a little follow through to the downside. Natural gas typically struggles at this time of year, but it is a little different this year, mainly due to European exports, or I should say exports to Europe.

That being said, this is a market still looking at a somewhat lack of demand situation. If we do fall from here, I’m going to become aggressively short. If we rally from here and break above the $3.85 level, then I’m going to see if we can find some selling pressure near the supply at $4.00. Really at this point in time, I don’t like the idea of buying natural gas as if it is set for a long trade. I’ll probably ignore it and just not trade it.

It’s just the wrong time of year to get aggressively bullish for natural gas, although you can trade it that way, but you have to do so from a short-term perspective. Longer term, sooner or later, the lack of demand will weigh upon the price. As North America is very mild at the moment, it’s not hot and it’s definitely not cold. So, demand for natural gas will continue to dwindle a bit. The question, of course, is whether or not electrical demand picks up. If it does, then that’s good for natural gas.

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