Major lows hit in Natural Gas

6 Nis 2020

Natural gas hit the demand curve four times in the last 14 year. The average percentage gain from the lows of the curve to the highs exceeds 200%. This is the fifth time hitting the curve.

If the lows hold, we could see a similar violent reversal off the curve.

13 Nis 2020

Not

Here is my execution plan to try to take advantage of this monthly pattern.



The probability of this failing is relatively high, but so is the return if it works. If there is a daily or weekly close under 1.51, I will wait to see what it looks like at the end of the month for possible re-entry. Leverage should be low. Nat gas is a dangerous market.

15 Nis 2020

İşlem aktif

Entry level was hit. Timing bottoms to the cent like this is a fools game. But when the bigger picture shows evidence of a possible major bottom or temporary key low, it's a good gamble to try to time the short time frame. The key thing in my opinion with trades like this is recognize how low the probability of timing it well actually is. I am very likely to get stopped out here, but I accept that possible outcome. Peter Brandt once told me why he hates mean reversion trades or counter trend set-ups. It was some of the most valuable bits of advice I've received in trading. He said, "when I lose money on a trade, it is my preference that in the process a market reveals something about itself. In these markets, it is possible to be wrong and not have the market reveal anything about itself." This means we can get stopped and it says nothing about the market, meaning it may very well still go into the direction you expected but the execution was off. This is the problem with timing bottoms and tops. They usually won't tell you anything if you get stopped.

Nevertheless, the trade here is low risk and very high reward if it works.
Entering here

16 Nis 2020

Not

Stopped at 1.59, re-entered at 1.61

16 Nis 2020

Not

A possible bottom is in place, but it's not yet out of the woods. 1.75 needs to be taken out on the daily. We need something like this to happen:


Remember, we still have the long term support on our side, so as heavy as this resistance is at 1.75/1.76, we're hoping that the bottom range is the thicker wall. While I am long, the safer bet is to wait for a daily close above 1.76 to have a higher probability outcome.

17 Nis 2020

Not

20 Nis 2020

Not

Now at the top of the range...



And that is what catching the bottom looks like

27 Nis 2020

Not

This is extremely constructive price action. Very bullish

4 Ağu 2020

Not

Analysing the front month of a futures contract could be very misleading. Had you gone long the September contract when I did this analysis here is what it would look like:


I was not involved in yesterday's 16% rally in natural gas. I am updating this more to highlight the difficulty in long term commodity investing with futures contracts.

20 Eki 2020

Not

The December contract is getting tight on the 4hr chart:


And the monthly price action is very bullish:

14 Haz 2021

Not

Rare to see a quarterly wedge like this. a 100% move from here wouldn't surprise me

7 Mar 2022

Not

Update:

Quarterly chart suggests to me Nat gas could go parabolic. Maybe 2-3x even from here is possible