Natural Gas Price Outlook – Natural Gas Reacts to Tariff Talk

Natural Gas Technical Analysis

Natural gas markets have gapped to the upside to kick off the trading week, gaining over 8% as in-person natural gas pit trading starts, but really at this point in time, a lot of this is based on the trade war noise. The question then becomes, will there be enough demand? And I don’t think there is. I think this might be the one last hurrah for natural gas. Perhaps a cold snap that I’m now hearing about possibly in the middle of February could drive prices up as well. But we’re getting to the end of the season.

So I tend to look at big moves to the upside as possible selling opportunities if we see exhaustion. Obviously, we don’t see that yet, but if the market were to continue to go higher, the $3.50 level could very well be an area where you would expect that. Not only is it a large round psychologically significant figure, but it is also an area where we have the 50 day EMA and have seen some action in the past anyway.

So, with that being the case, I am waiting for some type of long wick to start shorting, or perhaps the Canadians and Americans coming to some type of an agreement. Really at the end of the day though, this will be looked at as an overreaction, as it’s not exactly like the Americans don’t produce natural gas either. So with all of that being said, I am looking to fade this market, but right now I certainly would not do it.

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