Natural Gas Commodity Trading & Technical Analysis

In this particular trade, I’m looking at the natural gas markets as we have formed a hammer on the daily chart near the $2.75 level. This of course is a very bullish sign, and I also have a yellow area marked on the chart where I believe that there would be enough support and buyers could very well return. I entered the market based upon the top of the hammer being broken, and put a stop loss at $2.68, which is below the bottom of the hammer itself. At the entry, I put a take profit order at the $2.92 level. It’s late in the day, and that’s why I put the take profit order into the market, but I will more than likely try to go higher. You can see that the 50, the 100, and the 200 exponential moving averages are all moving in a nice uptrend and in the right direction. I do think that we make another attempt at $3 given enough time.

As you can see, on the hourly chart a little later into the trade, the market had been fairly volatile after the jobs number came out of the United States, better than expected by roughly 100,000 or so. When you look at the daily chart, nothing has been negated, and as a result I will be holding this position over the weekend. That of course will monitor the position between now and the end of the week, and as a result I will have to pay quite a bit of attention.

After the weekend ended, as the trade started had in my direction which of course is a good thing and it looks as if we are ready to continue going higher. At that point in time though, there was nothing to do other than to let the trade run its course. This is a perfect example of the market will get to where it’s going in its own time. Yes, I would obviously prefer to close the market out on Friday, but at the end of the day they were ready to make that move. Technical analysis typically doesn’t pay attention to time, so for example it could take an entire year to get to the $2.92 level. That’s not very likely, but it is in theory possible. Remember, you’re trying to reach for levels, not at specific times.

Importantly, you can see that the market did turned back around the course of the next several days and stopped my position out. There is that area of noise that should offer support, but quite frankly we drifted a little bit lower and looks as if we are trying to find buyers and we will have to let the market “reset” in other words, find its footing. I’m not interested in selling until we get below the $2.50 level, but at this point in time look like were to simply banging around and not quite ready to go higher. Sometimes, you pay a small price for information. This is told me that the market is still very much in the bullish trend, but just not full of momentum at the moment.