Nat Gas: Heating Up into the Winter
Updated
Brief Overview on Natural Gas
Natural Gas is a commodity generally traded on the premise of weather forecasts indicating cooler or warmer seasons. This allows traders to speculate on demand for the product as it generally trades higher with cooler temperatures. Today we are looking at the weekly chart.
Thesis: Technical Analysis Pointing to a Bounce
This analysis is mainly focused on the lasting demand zone that Natural Gas time and time again respects and typically bounces from. The weekly chart points to the likelihood that the R/R is favorable for a long position at these levels in the 2.20's. Not only do we see NG tap back into this heavy demand zone, but we also can see a Cup & Handle on the weekly chart signaling potential greater upside.
Disclosure
I am currently in a long position in Natural Gas after entering on the Friday (10/18) Close
My position includes:
UNG Credit Spread 13/12P [exp. 15 Nov. 2024], 
BOIL common shares
If this thesis holds up, I would plan to roll my credit spread contracts into further expirys
Thanks for reading!
Not Financial Advice
Natural Gas is a commodity generally traded on the premise of weather forecasts indicating cooler or warmer seasons. This allows traders to speculate on demand for the product as it generally trades higher with cooler temperatures. Today we are looking at the weekly chart.
Thesis: Technical Analysis Pointing to a Bounce
This analysis is mainly focused on the lasting demand zone that Natural Gas time and time again respects and typically bounces from. The weekly chart points to the likelihood that the R/R is favorable for a long position at these levels in the 2.20's. Not only do we see NG tap back into this heavy demand zone, but we also can see a Cup & Handle on the weekly chart signaling potential greater upside.
- Demand Zone offers strong R/R as it dips back in to these levels.
- Cup & Handle can represent even further upside, but will rely on the initial rebound to prompt the possibility of it playing out.
- There is also a trendline (not pictured) that is supporting the current bounce we are seeing today from the 2.18/2.19 level. It is important to note that the commodity has been seeing higher lows since the Spring.
- Lastly, a tap of fundamentals play into this idea as well. Though winter demand is always priced in, this year forecasts have repeatedly painted the picture that this winter will be historically mild. Due to these forecasts implying less seasonal demand for Nat Gas, a shift in the shorter-term and more accurate models as we approach the winter season will sharply move the price of Nat Gas and represents that the current price is truly pricing in a very mild winter. This basis supports the idea of great R/R on this LONG trade idea.
Disclosure
I am currently in a long position in Natural Gas after entering on the Friday (10/18) Close
My position includes:
UNG Credit Spread 13/12P [exp. 15 Nov. 2024], BOIL common sharesIf this thesis holds up, I would plan to roll my credit spread contracts into further expirys
Thanks for reading!
Not Financial Advice
Trade active
Trade still active, but trimming current position due to extreme meltup.
Only trimming due to strong storage news regarding NG this morning... still in, and swing is looking great!
We rode it from 2.3 to 2.52, the bottom was perfectly timed!
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