NG rally imminent creating BOIL rally - call strategy
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!:
And this is my chart for BOIL:
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!:
And this is my chart for BOIL:
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:
This is popping off now from the bottom trend in sync with start of the hurricane season upon us. I updated my price targets on an hourly chart to sync with Fib levels and you can see the change of character in the indicators as well as the price action.
Hourly Chart:
Hourly Chart:
