BOIL option play off Natural Gas NG1! rally
I expect NG to rally off the lower trend line of the pennant and go to at least the $8.47 liquidity zone. This is not purely a technical play as it is the season to expect increases in gas consumption/demand. Technically all the signs of a rally are present. The Weis waves for supply are decreasing and demand is increasing. The accumulation/distribution line has turned up. There is an increase in volume associated with the buys sufficient to build momentum to cross the creek/ break through the upper trend line . My target for NG is based on the liquidity left there from the last swings.
My first target for Natural Gas is $7.50. Second is $7.72. The trade will be invalidated south of the lower pennant trend line so a 'stop' placed there.
I am playing this long with October call options in BOIL While I am purchasing BOIL and not NG , my stop will be triggered by NG quote trigger - crossing 5 cents under the low of 9/26 at $6.72. It is possible there will be a shakeout/ spring /liquidity grab before the real move so cannot set stop too tight.
This is what I see in NG1!:
My play is options. Aiming for a home run on this. It is possible that both NG and BOIL will bounce off the targets the first time, so if you copy the naked option play the perfect play sells the calls on the pullback and buys back lower. But be careful being greedy! :)
My first target for Natural Gas is $7.50. Second is $7.72. The trade will be invalidated south of the lower pennant trend line so a 'stop' placed there.
I am playing this long with October call options in BOIL While I am purchasing BOIL and not NG , my stop will be triggered by NG quote trigger - crossing 5 cents under the low of 9/26 at $6.72. It is possible there will be a shakeout/ spring /liquidity grab before the real move so cannot set stop too tight.
This is what I see in NG1!:
My play is options. Aiming for a home run on this. It is possible that both NG and BOIL will bounce off the targets the first time, so if you copy the naked option play the perfect play sells the calls on the pullback and buys back lower. But be careful being greedy! :)
Comment:
Thanks to Javy for the Weis wave and MBoxMike for the Xpace and XKontrol indicators I used in confirming this play!
Trade active:
I made a few errors in this. I redrew the chart using the bottom of the wicks to draw the pennant and synced the target levels better with Fib levels. My stop was too tight on this chart. The accumulation in this was obvious, shorting premarket to buy on the cheap. The last short was considerably less effective - it gapped down a lot less than the previous shorts. In Wyckoff terms that shortening of thrust made the turnaround (change of Character) clear.
I couldn't publish my changes to this idea but if you would like to see how it should have looked with the expected action off of the liquidity levels, check out this link. If you copy this trade, make sure that on the pullbacks they are of lower volume (momentum down isnt building.)
Updated chart -
The breakout in NG is underway and using MBoxwave Tools for Market Analysis, you can see the buyside imbalances and positive cumulative delta growing, as well as total XKontrol of the offers, meaning the pace of offers is dominating the pace of the bids. This is happening!
I couldn't publish my changes to this idea but if you would like to see how it should have looked with the expected action off of the liquidity levels, check out this link. If you copy this trade, make sure that on the pullbacks they are of lower volume (momentum down isnt building.)
Updated chart -
The breakout in NG is underway and using MBoxwave Tools for Market Analysis, you can see the buyside imbalances and positive cumulative delta growing, as well as total XKontrol of the offers, meaning the pace of offers is dominating the pace of the bids. This is happening!
