• 4 minutes Will Libya Ever Recover?
  • 9 minutes USGS Announces Largest Continuous Oil Assessment in Texas and New Mexico
  • 13 minutes What Can Bring Oil Down to $20?
  • 16 minutes Venezuela continues to sink in misery
  • 21 hours Alberta govt to construct another WCS processing refinery
  • 8 hours Rage Without Proof: Maduro Accuses U.S. Official Of Plotting Venezuela Invasion
  • 12 hours Paris Is Burning Over Climate Change Taxes -- Is America Next?
  • 12 hours Instead Of A Withdrawal, An Initiative: Iran Hopes To Agree With Russia And Turkey on Syrian Constitution Forum
  • 22 hours Let's Just Block the Sun, Shall We?
  • 13 hours Water. The new oil?
  • 8 hours Storage will in time change the landscape for electricity
  • 2 days Quebecans Snub Noses at Alberta's Oil but Buy More Gasoline
  • 2 days U.S. Senate Advances Resolution To End Military Support For Saudis In Yemen
  • 2 days OPEC Cuts Deep to Save Cartel
  • 12 hours Regular Gas dropped to $2.21 per gallon today
  • 3 days Global Economy-Bad Days Are coming

Why I Am Holding Off On Natural Gas Even Though It Looks Like A Buy

One of the things that it is important for traders to understand is that markets have a natural tendency to overshoot. The classic zigzag pattern either heading up or down that most people think of when they think of a stock chart is the direct result of that. When a move starts, momentum builds to the point where an overshoot from the logical endpoint of that move is inevitable, and when that point is reached a correction ensues. That too will overshoot and the move resumes in the original direction, momentum builds to push it just a little too far again, and another correction follows…etc, etc.

Nothing has been a better example of that recently than natural gas futures. First, the climb up from around 2.50 to around 3.35 that started in the middle of August had the classic Elliott Wave look that comes from this tendency, with three up waves and two correcting down waves. Once that pattern finished at the high of 3.366 we started on an extreme example of it again as NG, the natural gas futures contract, collapsed around twenty percent in under two weeks then jumped twenty percent from that mark in just a couple of days.

(Click to enlarge)

That push back up above $3 proved to be very short lived though, and this week we have dropped back into the 2.70s. It would be logical, therefore, to assume that we are going even lower from here, but action over the last two days suggests that that is not the case, and that view is supported by fundamental…

To read the full article

Please sign up and become a premium OilPrice.com member to gain access to read the full article.

RegisterLogin

Trending Discussions




Oilprice - The No. 1 Source for Oil & Energy News