FX:NGAS   Natural Gas (Henry Hub)
Natural Gas continues to show a build up of bullish price action.

Linked below is a previous analysis on the winter contracts showing the target hit DEAD on. Being that winter is not here yet, it's very possible this pattern continues to play out to the upside.

First.
The most recent weather outlook now points to December being the coldest month which means the January contract is in focus. On the daily chart the price action continues to knock on the ceiling of resistance with several key indicators all flashing bullish signals.
1. Support at the 50 EMA
2. RSI breakout
3. MACD above zero with room to run

Targets.
The fibbonaci extensions map out objective targets. A big enough cold blast could easily send prices to the $4.20 level by Christmas. Which happens to line up almost perfectly with a macro fibonacci retracement from the 2018 highs to the 2020 lows.

Are you bullish yet?
Taking a step back looking at the weekly chart it looks even more bullish bouncing off both EMAs. My buy signal will be a break above the top of this weekly candle at 3.435 with a stop below last weeks candle.

Trading is risky and should not be attempted by anyone.
Comment: Breakout confirmed. Next step is to switch to the 1 hour chart and look for a dip to buy. Then looking to the 20 EMA for an exit signal. Do not attempt.
Trade active: Long QGF2021
+1 @ 3.445
Comment: Macro divergence points to face ripping moves to the upside coming. Watch out perma bears.

Comment: Profit taking is bringing price down. Opportunity to add coming soon.
Comment: Bad timing on this trade so far and down roughly $800 or so. Holding. Still leaning towards a winter break out to $4+. If weather disappoints I'd expect a retest of this trendline at some point where I would buy more. If $4 doesn't happen I think a pop back up to the top of the megaphone is worst case scenario.

Comment: Approaching the buy zone, the level where heavy volume came in before. Now looking for a supportive daily candle (like a hammer) to start adding in anticipation of a break towards $4.00-$4.20ish.
Trade closed: stop reached: Stop loss triggered and booked a $1,487 loss
Total NG trades on the year now stand at only $962 profit

Since unusually warmer weather is putting pressure on the market I'm waiting for a more ideal setup.
Comment: Not convinced it's time to buy just yet. Looking for a decisive break of the down trend.
Comment: Prices have popped back into the area of interest... for now. I am going to be extra patient. Explanation below...
Comment: Momentum is stretched and could easily rollover.
Comment: This could change and I'm sure there will be at least one more winter pop however, even on smaller timeframes it's going against the grain to buy right at this moment.

Trade active: We did close inside the channel so I opened a single contract position on QG futures @ 2.96. God Speed.

Target near the upper end.
Comment: Roughly 40% gain on the table if EQT breaks out in the coming months. MACD is forming nicely above the zero bound.

Trade closed: stop reached: This trade has been a disaster but can still learn from it.
\n1. Price failed to hold in the channel so I cut losses on that ugly candle.
\n2. The OBV is showing more volume is coming in on the sell side
\n3. Using the fib extension the next likely target down is 2.61 if sell pressure continues

Comment: Prices cut right through the fib. Now watching for the next move.
\n 1. Price cracked right through the 1.618 fib
\n 2. OBV indicates selling momentum
\n 3. Watching for daily candle hammer to find support at the fib
\n 4. If weather can turn around then next move is towards $3.00
\n 5. Otherwise next stop is likely the fib below

Comments

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