This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Natural Gas Trade

Natural gas futures (NGX13.NYM) NG 101713 have experienced a solid rally since the September low of 3.402, but a selloff could be ahead. As a matter of fact, it may have already begun.

The daily chart shows price has been testing a low volume node (LVN) at 3.875, which has become a significant resistance level in the chart.

In fact, the 3.875 level has been in play all year, as it had been support the first half of the year, and resistance ever since. Nat gas has banged on 3.875 three days in a row, and is now showing signs of an impending selloff.

First, the daily chart shows a bearish outside day pattern has formed, whereby the current session's high surpasses the prior day's high, and the current session's close price is below the prior day's low. This pattern signifies failed range expansion above, which usually sparks a selloff, as we saw into Wednesday's close.

Forming the bearish outside day pattern off a rejection at the significant 3.875 LVN offers further clues that selling could be intensified.

Also, the current three-day price range is the smallest of the last 10 days, and is also 33% smaller than the average three-day range. Both of these stats imply a breakout and range expansion ahead, regardless of direction. As a matter of fact, a confirmed break through resistance at 3.875 would likely spark a major rally, as buyers put the squeeze to the bears.

The game plan for natural gas



NG60 101713An aggressive approach would be to sell a pullback within the current trading range between 3.80 and 3.85. A confirmed approach would be to sell a break through 3.75. And a safe approach would be to sell a pullback to 3.75 after a confirmed break down prior to the retest.

The primary downside target is 3.65, which is both the composite volume point of the control (CVPOC) and prior resistance. A scaling point would be at monthly VWAP at 3.69, and the home run target is the last line of support at the 3.485 LVN.

Should an upside break occur, look for price to rally to the 3.941 to 3.975 zone.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $128.73 -0.17%
FB $78.81 -0.23%
GOOG $540.66 0.51%
TSLA $230.65 2.00%
YHOO $42.02 -1.20%

Markets

DOW 18,070.40 +46.34 0.26%
S&P 500 2,114.49 +6.20 0.29%
NASDAQ 5,016.9290 +11.5380 0.23%

Partners Compare Online Brokers

Free Reports