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Commodity Chart Of The Day

Daily Natural Gas

(click image to enlarge)

Crude oil and the distillates have already started to trade lower, as one can see by examining the charts on those three products. The lone holdout in the energy complex has been natural gas, but based on the near 5% correction today and the failure to hold onto early gains, this could be the beginning of the correction forecast in recent weeks.

In the chart above, the 18 day MA (identified by the blue line) was challenged on its lows today. I have advised traders to scale into bearish plays using the Fibonacci levels as their targets on the way down. My favored play currently is shorting NGZ12 futures while simultaneously selling just of the money puts 1:1. I think an additional 25-40 cent break could happen in the coming weeks. On that, look to capitalize on shorts, and then reverse in an attempt to gain on bullish exposure into the winter months.

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.

Source: Commodity Chart Of The Day: Natural Gas