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Natural Gas Forecast and Trade Opportunity Update: Target Reached


U.S. natural gas prices continue their rollercoaster ride at the height of the heating season, after extreme volatility gripped the market in the fall amid more-than-a-decade low natural gas inventories ahead of the winter.

The volatility in the natural gas market is likely to continue to be high through the winter, as inventories below the five-year average and seasonal storage draw make natural gas prices highly vulnerable to changes in the short-term weather models and forecasts.

Low storage level (relative to historical norms) is making the price extremely susceptible to changes in the weather models. Instead of pushing the price higher gradually by 5-10 cents a week, bullish changes in the short-term weather models create fear, which results in double-digit rallies over the course of a single trading session, as happened on Monday, January 14.

Shortly: The bullish changes in the weather models are resulting in an extremely exaggerated bullish change in natural gas prices. Prompt-month contract price can reach high levels and then correct vsharply even if weather turns only slightly bearish. In other words, prompt month contracts (February contract and, to a lesser degree, March contract) are very speculative and very risky to trade right now.

The best strategy in Ngas February and March contracts can be buying the dips at the strong suppor levels.

Looking at the NGAS February contracts, the price is testing the EMA 50 and Ichimoku Cloud support. We also see a bullish flag formation on the H4 Chart.

Our trade setup is to buy at 3.27 with stop loss below 3.15 targeting 3.51 ( potential breakout of the flag) and 3.70. The ultimate target of the bullish flag formation is 3.87.

Update: Trade Reached the 3.51 and we closed the positions.

You can watch the trade: NATGAS TRADE SETUP

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DISCLAIMER: This is a technical analysis study, not advice or recommendation to invest money

Natural Gas: Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. Chartreaderpro does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility

 
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