Natural Gas Technical Analysis

The natural gas market has gone back and forth during the course of the trading session here on Thursday, as we are hovering around the $4.50 level. Ultimately, this is a market that I think, given enough time, will have to have some type of pullback after this shot higher, but it’s worth noting that we are trading the December contract, and that, of course, has a major influence on how the price behaves. After all, the heating demand in the Northeastern part of the United States, as well as Northern Europe, will be picking up during December, so it does make sense that we have a little bit of elevated pricing at the moment.

The question at this point is going to be whether or not we can continue to see this type of momentum or if we get some type of pullback. I suspect that a pullback at this point in time ends up being a buying opportunity, especially if we can get down to somewhere close to the $4 level. I do not like the idea of trying to chase the market all the way up here. Ultimately, this is a scenario where you’re looking for value. You just don’t have it after this type of run, but clearly this is a one-way trade. You should not be trying to short this market, trying to pick a top. I can’t think of a worse trade out there at the moment.