At last, a bottom in Natural Gas

 

H&S bottom provides opportunity for generational bottom

At long last, a bottom may be in sight. The Natural Gas market has been in a cyclic bear trend since late 2005, as seen on the monthly chart below. I believe strongly that the low at 1.902 will not be seen again in my trading lifetime.

The continuation daily chart displays a classic H&S bottom. If this interpretation is correct the June low may serve as the right shoulder low.

This market is for long-term position traders willing to be long distant futures contracts at current levels without a stop order. Should the market slip back to 2.000 it would be an opportunity to add to long positions. Natural Gas should be viewed as a multi-year trade.

From a trading standpoint I am willing to extend leverage if the H&S bottom is completed on a closing basis. Shorter-term traders should wait for a retest of the June low or a completion of the H&S before taking a position.

The alternatives to play this market include owning distant futures (such as the February 2013 contract) or Natural Gas producers. I do NOT want anything to do with UNG or especially with the ultra long ETFs. In fact, I am willing to short the ultras on strong rallies.

$NG_F, $UNG

 

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  1. […] On an absolute basis, Nat Gas has plenty of room to run. Remember, this was a commodity that was basically left for dead. And Peter does a nice job in his post explaining the thought process. I’m sure you’re annoyed with my thoughts and comments on this by now, so go see was Brandt has to say, At Last, A Bottom In Natural Gas. […]

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