Thursday Evening 13 January 2011
We have tracked Natural Gas for the last few months as it moves
along the right hand side of its current trading range. The import
of that is the further along price goes, the closer it is to a breakout.
However, some ranges can last for years. Still, there are viable
opportunities for good trade potentials. Here is one that barely got
out of the gate.
This trade was based on what is called a failed probe. In this
instance, price went lower in early morning trade, and there was a
large volume spike. This often represents stopping volume. There
was no down side follow-through, and that is what confirms the
potential bar as stopping action. The next several bars held the
4.400 level, demonstrating support. After waiting for confirmation,
a position was taken late in the day, and a stop of 439.76 was placed
under the low. The potential was back to the last swing high, the
4.560 area. It was a better than 2 to 1 risk/reward prospective trade.
This was around 1:20 p.m..
All the waiting to make sure things were falling into place fell one
intra day period short. The next time frame began a decline in
earnest, and it did not stop until 4.378, just a few tics above the
Later on, after regular trading hours, price gave way, and the
position was stopped out. Was it worth taking in the first place?
A look at the daily...
There had been several failed probe buy opportunities starting in
October and noted by the arrows. Five times, there was a decent,
profitable rally to follow. The sixth time was not the charm. It is all
a part of trading. One never knows what the outcome of any given
trade will be. Price has rallied back over 4.400, this evening, and
maybe the anticipated rally will still follow. Just not with us...