BOIL in the past month fell from a head and shoulders pattern on the 15 minute time frame
into a trend down which leveled out into a double bottom. Supply is in a draw
down right now as might be expected when gas production is diminished in the middle of winter
while demand is rising. The Economics 101 expectation is rising prices on the futures market.
The chart shows a Fibonacci retracement would take price from its current level to about 29
or about 20% upside if that level holds and more if prices can make a stronger more or
if short positions or puts are forced to closed causing some buying pressure synergy.
The RSI indicator confirms the reversal at the double bottom and adds a bit of insurance
to the risk. Accordingly, I am expecting a 20% in the next 2-3 weeks. Target for 2/3 of
the position is 29 while the other 1/3 ( short squeeze scenario) to run to a target of 33
which is the neckline of the H & S pattern. Taking a look at OTM call options striking
$ 30-31 range. Additionally, I will watch the AI algo indicator for a Sell Signal and reassess the
position at that time given its 90% accuracy at this given time frame as evidenced by
a 2000 candle backtest ( or about 500 hours or 82 trading days). Energy may not be the hottest
sector right now but nor is it the coldest.
Trade active
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The contrarian analysis linked here:
Comment
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Nice pop today. took down 1/3 of positions after the pop which tomorrow will be a drop ( Que sera sera) which can be played short or long KOLD
Comment
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BOIL added 9% today popping out of a high tight bull flag pattern. Holding until close of the week for another partial
Trade closed: target reached
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A review of the zoom out of UNG is the supertrend is still down and the recent pop in BOIL was a correction - micro-trend adjusting the far greater trend down. BOIL is closed with a substantial profit. Switching back to KOLD and short UNG / UNL
Trade closed: target reached
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Gas has ended the correction. I have closed all my natural gas long positions including options in favor of shorting gas
@elenaec, Yes I am and yes I did- piece by piece averaging in - took a bit off with the pop today. Got calls and puts going also but try not to go to far because of time decay paid over and over. Intraday trading is best per the prospectus if it can be made.
AwesomeAvani
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@elenaec, shorts are in position what happens when price rises and their unrealized profits get trimmed ?
elenaec
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So Boil will not reach again $ 50 to $ 80 this summer or even earlier in spring ????? Thank you , hope you are doing well
AwesomeAvani
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@elenaec, I am looking to play only UNG up and down going forward. BOIL with the leverage seems to be destinated to be only a short term play in either directions due to the mathematics embedded in the leveraging. I am researched this quite a bit and the same applies to most of the leveraged ETFs and is actually disclosed in the fine print of the prospectus for each intrument. So to long natural gas with a futures ETF use UNG long and viceversa. Stay away from long term positions in KOLD/BOIL. okay to flip flop every couple of days depending on reversion to the mean concepts but avoid anything beyond the current week - IMO ! based on current knowledge and understanding !
elenaec
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@AwesomeAvani, thank you for your reply ! some research noticed that for the last 15 years kold went up in November/December , part of Jan and Feb and then Boil went up in March for the last 10-15 years , boil may follow the pattern , in March , let's see , but you are right this one over time goes lower due to storage expense etc
@AwesomeAvani, So I have not read the fine print but can imagine....so what happens does this have the potential to go to zero, or if gas prices rebound it can never go as high as it was? I unfortunately am long and at this point I would rather hold and take a full tax write off. Not my usual strategy just curious how these went. Sadly also sold out of my Kold after weathering the down turn only for it to double? Typical....hahaha
AwesomeAvani
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@deemerdana, this article kind of explains the time decay. If I was in your situation I would average out in pieces. As to the proceeds, if you are still thinking that gas prices will rise over time consider watching UNG on a daily chart and buying in pieces averaging up when every you see a dip in price below the SMA5 moving average but not below the SMA20. This will help you buy at the best price and be patient while you are getting out of BOIL. As to selling BOIL run the daily Chart with the moving averages. Take out a share every day the price is above the SMA3 or SMA5. This will allow you to take a share when price is not fading and get those most out of your position. Resist the urge to sell low. It is worse than time decay see this link thebalancemoney.com/leveraged-etfs-lose-money-357489