Natural Gas seems to be at an interesting level. I am expecting either a continued rally to the .786 retracement from the December high (around 3.678) or a drop from this area which will complete a bearish Head and Shoulders pattern.
Reasons to be bullish:
NG has broken out of a small bullish flag, the correction of which ended almost exactly at the .382 -- showing some strength
In this rough wave count, it is possible that this breakout is the beginning of wave of a larger wave (B)
RSI is not yet overbought (although there is bearish divergence)
AO has stayed above the 0 line (although there is bearish divergence)
I am expecting crude oil to begin a rally, and there appears to be a decent correlation between the two instruments
---In this scenario I will watch for price to stall and RSI signals to short around the .786 area, which may drop to complete the bullish Gartley shown which would complete in the 2.122 area
Reasons to be bearish:
In this rather crude wave count it looks as if we are in the middle of a three wave correction, and it is possible Wave (B) has already ended and Wave (C) is about to begin
NG recently broke out of the bullish channel it had been trading in since February. This channel could possibly be viewed as a bearish flag with Wave (A) as the flagpole
NG broke the longer term trendline from last year's lows, and since then has re-tested/been rejected by it from below
Bearish Divergence in the RSI and AO
Potential for a double-top or something similar in the current price area which is where prices stalled in the rally from earlier this year
---In this scenario I will watch for a break of the neckline and target the typical H&S targets
I found this situation very interesting so wanted to share it. If you have any views or feedback on this idea please share it with me as I am always seeking to learn and looking to entertain new perspectives!
Reasons to be bullish:
NG has broken out of a small bullish flag, the correction of which ended almost exactly at the .382 -- showing some strength
In this rough wave count, it is possible that this breakout is the beginning of wave of a larger wave (B)
RSI is not yet overbought (although there is bearish divergence)
AO has stayed above the 0 line (although there is bearish divergence)
I am expecting crude oil to begin a rally, and there appears to be a decent correlation between the two instruments
---In this scenario I will watch for price to stall and RSI signals to short around the .786 area, which may drop to complete the bullish Gartley shown which would complete in the 2.122 area
Reasons to be bearish:
In this rather crude wave count it looks as if we are in the middle of a three wave correction, and it is possible Wave (B) has already ended and Wave (C) is about to begin
NG recently broke out of the bullish channel it had been trading in since February. This channel could possibly be viewed as a bearish flag with Wave (A) as the flagpole
NG broke the longer term trendline from last year's lows, and since then has re-tested/been rejected by it from below
Bearish Divergence in the RSI and AO
Potential for a double-top or something similar in the current price area which is where prices stalled in the rally from earlier this year
---In this scenario I will watch for a break of the neckline and target the typical H&S targets
I found this situation very interesting so wanted to share it. If you have any views or feedback on this idea please share it with me as I am always seeking to learn and looking to entertain new perspectives!
NG just filled the gap to the pip. The price has bounced 12 pips as of now up to now (this chart is delayed)...if it retraces within 5-10 pips of this low I will likely try to long with my stops below this current low (depending price action until then)