Natural Gas Price Outlook – Natural Gas Plummets in Early Monday Trading

Adam

Summary:

Natural gas prices fell over 5.5% early Monday amid weak seasonal demand and mild U.S. weather. A break below the $3.45 uptrend line may signal further downside toward $3 support.

The natural gas market fell over 5.5% in the early hours of Monday, as we continue to see a lot of questions asked about natural gas demand, and of course, the geopolitical aspects of this market as well.

Natural Gas Technical Analysis

The natural gas market has fallen pretty significantly during the trading session on Monday, dropping over five and a half percent by the time New York gets on board. This is a market that is going to have to continue to deal with the idea of milder temperatures in the United States, so therefore, electricity demand probably drops. There is a significant amount of support underneath, especially near the $3.45 area or so, as the previous uptrend line is still holding intact. So, I’ll be watching that uptrend line because if we break down below it, it could open up the possibility of a bigger move to the downside.

Ultimately, I think this is a scenario where traders are looking at it through the prism of the seasonality, and of course, not liking natural gas, I’ve made no qualms whatsoever about natural gas being something that I never buy this time of year. I only look to fade signs of exhaustion, mainly due to the fact that air conditioning is not a thing quite yet in the United States for the most part. And of course, heating is no longer a thing.

Unless we get more trouble out of the Middle East, we probably continue to see a little bit of weakening when it comes to the overall uptrend in natural gas. Eventually though, if we can break down below the uptrend line, then I think $3 could be your target. Although it may take a while to get there due to a lack of Russian gas in the European Union.

Source: fxempire

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