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GAS

Natural Gas at a CrossroadsNatural gas at the daily view. Natural gas experienced a pullback. That shouldn't be surprising at all since profit taking after a spike up is normal. The lower blue line is the ascending resistance stemming from March 23rd. Interestingly, a long-term channel line is also acting as temporary resistance. So, natural gas has two choices. Either natural gas consolidates here for another move up or move down to a key support below around $1.98. That channel line below served as a support from years past once momentum to the upside picks up. For natural gas, you have to think in bigger time frames. Most gas traders that I see only see it at 15 minute or similar small frame views. By being stuck at smaller time frames, traders tend to lose the big picture. For example, many permabears didn't see that inverse head and shoulders pattern in the last 2 months nor the bottoming pattern at the weekly view. Furthermore, natural gas is currently forming a big bull flag... for now. If natural gas reaches 1.98, the bull flag is still intact. August usually provides the summer spike. However, September is when natural gas usage slows down. Why don't I think natural gas will continue to decline? Seasonality is obvious. A wave of gas companies already filed for bankruptcy back in June which cuts down the number of suppliers in the longer term. The Midwestern states are also still open where a large part of the industrial sector resides. The industrial sector is one of the largest users of natural gas by the way. The Midwestern states are much more sparsely populated and the population travels less overseas too. Last year, natural gas declined due to the US having one of the warmest winters in recent history. If I remember my science classes from college, nature has a way to balance things out. Current forecasts for this coming winter in the US is another polar vortex. That's fundamentals. Let's look at it from a technical view. Last month, natural gas was only around $0.50 from the historic lows. Gas also already had a 2-year bear market. As everyone who ever traded for years, every market cycle and every bull/bear market comes to an end eventually. The summer months show an obvious bottoming pattern. It might be extended. The flag support for gas is around 1.58. That said, the downside is much less than the upside. Let say, you longed from 1.90 and the prices dropped to 1.58. Gas is very seasonal. You would only play the waiting game for prices to ramp up in preparation for fall and winter. If you short from 1.90 and enters its seasonal bull run, what are the chances that it will return back to the 1.50? I don't know myself, but it seems lower than the previous scenario. Think about it. If you go short near the all-time lows, that's as reckless as going long near the all-time highs. It's simple probabilities. Market sentiment about natural gas is excessively bearish. If everyone is bearish on an asset, then that's actually a bullish signal. Why? If all the bears are already in a short position, what will stop buyers from driving the price up? The issue with gas is that you have to look at it from a macro view like Bitcoin. The big picture will always trump the small movements.
NYMEX:NG1!
by Itsallsotiresome
Gas in Season 8/8/2020Natural gas is finally in season due to the increased demand for A/C. Natural gas made an inverse head and shoulders pattern for the past few months. It met resistance right at one of my green lines. It's green because it will eventually become support in the future. Natural gas is very seasonal. Right now, the demand has increased due to the hot weather in August. However, natural gas may spike down during September due to cooler temperatures. If natural gas doesn't go back to the lows, then it may be forming a multi-day bull flag during September. Natural gas tends to really ramp up in colder temperatures starting in mid-October. Personally, I would not short natural gas. Sure, you can make a case for the spikes down. Let's look at the big picture here. Last month had the lowest prices in natural gas in nearly 30 years. If you are already at near historic lows, how much more can you short? You're trying to squeeze juice from a dried fruit at that point. Let's say you longed gas and it spikes down. All you have to do is wait for winter to get profits. Why? Cold temperatures require heat. Heat requires energy. Energy requires fuel. Oil prices are also coming back too. If you think about it, gas is a laggard. You need oil to produce gas. If oil becomes more expensive, gas will eventually become more expensive. If not, imagine by next year if a vaccine is developed. Uni of Oxford was on it since January. Demand for energy will skyrocket once a vaccine is mass produced. We were already near historic lows in natural gas. It's just playing a waiting game for it to spike further. Chess, not checkers.
NYMEX:NG1!
by Itsallsotiresome
Gas in a Box 7/31/2020Natural gas at the 4 hour view. It turns out that natural gas has been in a downward channel since 2018. Furthermore, in the last 3 months, gas has been in a trading box. You know what this means? Gas has become predictable. It may look choppy at first, but it's trading in a general range between 1.58 to 1.93. There were spikes above and below that range. However, those spikes do not last long at all. Furthermore, it seems the upward and downward movements last in a weekly cycle. Since equities seems to be going no where, I think I found my favorite commodity to trade. Personally, I would mainly long gas at the bottom. Why? We are at historic lows for natural gas. Gas is also seasonal. Usage has increased due to the need for more air conditioning in the summer heat. I would still use UGAZF since the liquidity is still there. I would not short gas unless seasonality, lower usage, and a cyclical correction are all on your side. Shorting takes a lot more skill than longing. Once we start recovering economically, natural gas may skyrocket due to increased usage. How much usage would increase if California and New York actually open for business?
NYMEX:NG1!
by Itsallsotiresome
Natgas on the Range by ThinkingAntsOkMain items we can see on the chart: a) The price is on a weekly support zone and since MARCH 2020 has been ranging between 2USD and 1.50USD b) If we analyze the range we can see that the price is moving towards the higher level of it, after the breakout of the zig-zag pattern (corrective structure) c) The breakout of the range will give us reliable information about what to expect. Currently, we are in a historical reversion zone d) If a breakout happens (bullish), we will wait for a daily corrective structure, and we will take the beginning of a new weekly motive wave IF all the filers happen. e) FILTERS: Breakout of the range + 3 weeks correction
NYMEX:NG1!
by ThinkingAntsOk
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