February Natural Gas
Don’t read to much into the title of my article. It is not a statement about Mother Nature playing a role in the direction of the natural gas futures market rather I just thought it was catchy. When I spend time looking for directional clues in any market I focus solely on structure, location and momentum. The first thing that jumps off the page to me concerning the natural gas price chart is the utter sloppiness of the selloff that has unfolded since the highs set in late 2016. I believe it is of an non-impulsive nature and thus unsustainable. I have currently labeled it a complex W-Y-Z correction which will give way to a sustainable advance in the months to come. The recent low of 2.562 ran a tad past the .618 retracement level which converged with the longer term geometric line support. This +/- 3.000 level also marks two previous weekly inflection lows dating back to early 2015. Also of interest is the noticeable momentum divergence appearing in multiple time-frame price charts. All of this leads me to believe there is a favorable bullish risk/reward setup. Ideally I like to observe one more lower thrust that would bottom out somewhere around 2.800. Coming off that point ,should it play out that way, I’d be looking for a rise above 2.880. Should all of this unfold I’d be recommending the establishment of a bullish position with my ultimate target at approximately 4.800. This equates to about a 12 to 1 favorable risk/reward scenario.
My analytical breakdown focuses on a blend of wave pattern recognition, long and short term geometrical extensions and momentum signal interpretation. I welcome you to contact me at Walsh Trading to discuss my assessment of this and any other market.