Commodity Chart Of The Day: Natural Gas

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Includes: GAZ, NAGS, UNG
by: Matthew Bradbard

Commodity Chart Of The Day

Daily Natural Gas

(Click to enlarge)Click to enlarge

Natural gas failed to hold onto gains today reversing to close back under its 8 day MA as seen above. I had been calling for a trade lower and with the rejection of a $3 trade should be a preliminary sign that prices are headed south.

Stochastics on the daily are also indicating natural gas is overbought and as seen with the orange line; the 8 day MA prices have remained above that pivot point since prices penetrated that level nearly three weeks ago. I suggest using the Fibonacci levels as your targets on downside movement. I like the idea of bear put spreads and also a short futures trade while simultaneously selling out of the money calls 1:1.

What also makes this attractive is the risk/reward dynamic; risking 20-25 cents looking to make 40-50 cents.

Risk Disclaimer: The opinions contained herein are for general information only and not tailored to any specific investor's needs or investment goals. Any opinions expressed in this article are as of the date indicated. Trading futures, options and Forex involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.