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Potential Breakout for Natural Gas by TrendFollower

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6 minutes ago, TrendFollower said:

@CharlotteIG,

I am interesting in seeing if the chart I have included (above) plays out.

Same. I see the strategy behind it just playing the waiting game now 

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3 hours ago, CharlotteIG said:

Same. I see the strategy behind it just playing the waiting game now 

 

You are trading as well?

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@CharlotteIG,

All it takes is for the weather forecast to be slightly out, for it to be warmer than predicted this winter and supply not declining as much as expected for Natural Gas prices to decline rather than appreciate. The fundamentals can change the technicals very quickly. 

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I don't know much about Natural Gas, except for its uses in power generation, but as a market it doesn't look like there is a supply side issue with Natural gas globally.  I have heard a few energy experts opine that there is "loads" of natural gas so based on this as an overarching fundamental I would expect to see prices declining.

https://www.statista.com/statistics/281873/worldwide-reserves-of-natural-gas/

A look at the long term chart (below) would seem to confirm the above supply side thesis.  I suspect, but do not know for sure, that annual weather patterns have limited time frame impact on price.  Naturally producers increase prices into winter and may use a bad winter as a justification for higher prices but the long term price trend is clearly not consistent with good/bad weather alternating, we have had some cold ones, including snow and ice storms in Florida (I can't remember exactly but this happened somewhere between 2011-13) over the time period of the current Bear market.  Some wags may say that this is consistent with global warming... 🙄

From a purely technical perspective there is nothing supporting a price breakout to the upside yet.  The price movement since the all time highs has been in a large A-B-C form, that is potentially in an ending channel formation at present with very significant PMD so seeking a breakout rally would seem to be right.  However it is by no means clear that the Bear has bottomed out and turned.  The ending channel often exhibits an A-E wave form before the end.  Irritatingly the E can be truncated (i.e. not fall below the D nor touch the lower channel line - ho hum!).  As price remains within the consolidation phase no breakout has yet occurred and with the price action it seems at least evens that we will see a lower low and quite possibly a return to the all time market lows before speculation get going.  However I don't as yet see where a long term sustainable demand over supply issue will emerge to drive this commodity back towards the ATHs, unless this is purely an across the board reflation or hyper inflationary cycle.  Of course that is the very nature of a Black Swan event...

That said, I know very little about Natural gas...

NG-Monthly.thumb.png.3f44f4eb4f188eadcadac658941e0088.png

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56 minutes ago, Mercury said:

Some wags may say that this is consistent with global warming

 

Climate change is made apparent in a greater frequency of extreme weather conditions.  The 'warming' refers to sea temperature levels.

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8 minutes ago, dmedin said:

Climate change is made apparent in a greater frequency of extreme weather conditions.  The 'warming' refers to sea temperature levels.

Global warming is the long-term rise in the average temperature of the Earth's climate system. It is a major aspect of climate change, and has been demonstrated by direct temperature measurements and by measurements of various effects of the warming.  Wikipedia.

Earth's climate arises from the interaction of five major climate system components: the atmosphere (air), the hydrosphere (water), the cryosphere (ice and permafrost), the lithosphere (earth's upper rocky layer) and the biosphere (living things). Wikipedia.

However, speaking more accurately, global warming denotes the mainly human-caused increase in global surface temperatures and its projected continuation. Wikipedia.

The instrumental temperature record provides the temperature of Earth's climate system from the historical network of in situ measurements of surface air temperatures and ocean surface temperatures. Wikipedia.

 

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There will be demand for the fossil fuels for decades to come.

 

'Although the most common measure of global warming is the increase in the near-surface atmospheric temperature, over 90% of the additional energy stored in the climate system over the last 50 years has warmed ocean water.'

 

We're all doomed.

Edited by dmedin

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9 minutes ago, dmedin said:

We're all doomed.

Don't worry, we will run out of food and water long before the seas rise or the currents reverse and freeze us all.  On the plus side, we will have plenty of natural gas to keep us warm...

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So Natural Gas has touched the price area I have highlighted. I am expecting it to turn within the rectangle area upwards. 

1375357332_NaturalGas_20191126_18_57.thumb.png.959ba83597a2f16169b704b2b8e4e288.png

@Mercury, is right to point out that there is a 'Supply Glut' in Natural Gas and the US is one of the biggest holders of Natural Gas. This is a more shorter time period trade for those who are interested. I am not suggesting that Natural Gas will go on and make new all time highs or go on an upward trend for the next year or so. I think during these winter months it may continue in its current directional path. 

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For me now it seems Natural Gas could potentially be heading to the 'red rectangle' below. Potential breakout is now an actual breakout to the downside. 

1217944994_NaturalGas_20191129_18_26.thumb.png.b11e75dbc1a7fc1500fe7c568b8cbdcc.png

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2150 seems like a possibility and Natural Gas seem to be heading there.

Traders may want to look at the 2100 price area for any potential turn to the upside. 

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Is Natural Gas going to resume the next leg upwards or continue downwards?

595915679_NaturalGas_20191203_19_33.thumb.png.6a5a2867870b379f378f74774884e671.png

It will be interesting how the price reacts going forwards. This could go either way but the Wall Street Journal has reported cold weather forecasts in the coming weeks which is one of the reasons why Natural Gas jumped up in price. The next few days and weeks could be rather interesting. 

Edited by TrendFollower

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If you see my posts (above) then you will see that I was indicating the current move and 'gapping down' activity. 

Reports are suggesting that the price has gapped lower due to warmer weather forecast. I think that is the narrative being applied and though it may be true I think Natural Gas would have gone to these price levels regardless. However, I cannot evidence that at this stage so it is only a personal opinion from me. 

The supply of Natural Gas rose around 1% compared to the previous week. Again that has provided a bearish backdrop to Natural Gas prices. 

I think there is the possibility of further downward pressure on Natural Gas prices as I am highlighting in the chart below. I think the 'blue' rectangle zone could be reached shortly. 

630794947_NaturalGas_20191210_06_55.thumb.png.6fec4d5acbfe6251c91019a854f308b9.png

It seems that prices are at the mercy of weather forecasts which are changing from hot to cold and then warm, etc. This is the beast which is Natural Gas. Add to this the supply and demand fundamentals and you can begin to see why such volatility exists. This volatility is great for shorter term traders or for short term trades. 

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Actually looks very bearish, and the big speculators are increasing their shorts:

Selection_001.thumb.png.c3421f641c8a84dbd4460bfec139ea01.png

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@dmedin,

I agree but Natural Gas is one of those 'beasts' which can move in the opposite direction to which you expect. The volatility in Natural Gas catches a lot of traders out as well as its directional moves. 

I think the next few weeks will be rather interesting. There is definitely a bearish bias. 

 

Edited by TrendFollower
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59 minutes ago, TrendFollower said:

I think the next few weeks will be rather interesting. There is definitely a bearish bias

You're right and the same was true of Arabia coffee until fairly recently so definitely worth looking out for a turn.

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There you go. Intraday lowest price today is now touching distance from the 'blue rectangle' zone I highlighted in my previous post (above) and showing current price action (below).

2105194126_NaturalGas_20191231_17_34.png.1a0fb9324208dcf1f9c529ed450630bd.png

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There you go. Natural Gas has now landed in the 'blue rectangle' zone that I have been anticipating in my previous posts in this thread.

1541567517_NaturalGas_20200102_16_06.png.449e3f16d54bb47c1c5397a12d4ffd98.png

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Guest lazywhale

https://www.tradingview.com/x/q9iIrnPc/

Why did it drop so hard today? Did I miss any news ? Longed it at 2,126

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So far Natural Gas has played out like the assumption I put forward. The price action has tested my assumption and confirmed it so far. 

Trading based on assumption based modelling is leading me to think Natural Gas will now turn from downtrend to uptrend (nice for swing traders) as it bounces off the 'blue rectangle' prize zone. 

It will be interesting to see if the price action confirms or rejects this next assumption. 

1340750639_NaturalGas_20200109_05_21.thumb.png.34b6fe9e9dafb910e0243046045d2f10.png

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Quote

 

The oil-to-gas ratio, or the level at which oil trades compared with natural gas, recently reached 30-to-1, and could increase further as analysts expect average gas prices will fall for a second consecutive year in 2020 to their lowest level in over 20 years.

That is because most U.S. drillers are not looking for gas.

 

 

https://uk.reuters.com/article/uk-usa-natgas-oil-graphic/divergent-paths-oil-natural-gas-going-different-directions-idUKKBN1Z80IP

 

Big boys still heavily net short:

gash.thumb.jpg.06489d487c6be8d4c42c60629c867846.jpg

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Really happy that this is still being talked about. We have a piece from DailyFX ideas again: 

image.png
Does anyone else have support lines on this one, if so where?

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@CharlotteIG,

I am glad that you are really happy that this is still being talked about. Natural Gas is one of the most difficult commodities to trade in my personal experience. It is very volatile and choppy. 

I am going to share below the support prices based on the 'Weekly' and 'Monthly' longer term charts for Natural Gas which are aligning nicely with the 'Daily' chart. 

1649394140_NaturalGas_20200109_21.10-2.thumb.png.f907a625539b1062352cabb945a7e90a.png

878966908_NaturalGas_20200109_21_10.thumb.png.ed10c056464261a4db3b50baa4580f05.png

As you can see from both charts I have included the 'red rectangle' which is in my personal opinion the price support for Natural Gas. Now of course this can change going forwards due to extreme weather conditions which were not accurately forecasted or a sudden change in supply and demand fundamentals for Natural Gas. However, if none of those things change significantly then we are looking at some strong support for Natural Gas at current price levels.

So this means some severely bearish news has to be released in relation to Natural Gas for the price to go below the 'red rectangle' price zone. Otherwise we will witness consolidation and then some upside in Natural Gas prices. This could take a while as the consolidation and sideways activity may last a while until there is a significant change in the fundamentals. 

So the prices could decline down towards the 1700 area if things continue and then partake in range bound activity until it is ready to move upwards. 

I still favour a short term move upwards from current price levels before any further downside moves. 

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Natural Gas is heading towards support on 'Monthly' price charts as shown by the 'blue rectangle' below.

1420352817_NaturalGas_20200118_12_14.thumb.png.a7befe78db758a6f52d03ff2063312f9.png

Natural Gas is trending strongly downwards so is a great shorting opportunity and for those who initiated a 'short' trade when I first suggested it well done. I do think Natural Gas will see a strong spike upwards at some point as the speculators, shorters and profit takes liquidate their positions and we see a short covering rally. So it is worth keeping an eye on this possibility as there could be a great short term opportunity to profit from a lot of points movement in a very short timescale. For now Natural Gas is bearish and may well continue downwards towards the 'Monthly' price support areas. 

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Natural Gas is plummeting downwards and it seems my price area from 9th January 2020 (post) may well come into play. 

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As I stated back in my 9th Jan post in this thread that I was expecting Natural Gas to go into the 1700 price area and that is exactly what has happened. 

If you now look at the 'Weekly' and 'Monthly' timeframes then you will see that historically this price area offers long term support and the price has bounced upwards from this area.

Now of course there is no guarantee this will happen now as the fundamentals and demand/supply situation may be different but based on odds/balance of probability I think the price is more likely to than not go upwards from these price levels. 

Now that is an assumption based on historical price patterns and therefore I now want the future price action to confirm or reject this assumption. 

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