Today we want to highlight the strength in Natural Gas, a theme we’ve been pointing to most of this year but that’s now accelerating.
Let’s take a look at what’s happening and how we can take advantage of it.
Here’s the chart we were using as our roadmap at the beginning of the year as prices approached long-term support near 115. Additionally, we were seeing momentum stay out of oversold territory, signaling that sellers were unable to stay aggressive and take prices to new lows.
Click on chart to enlarge view.
This week we’ve seen an acceleration to the upside, pushing prices above former support to new year-to-date highs. This upside acceleration has confirmed the long-term bottom we were looking for and suggests we could see a move back towards the top of its multi-year range at 265 (or even higher at 358) over the coming quarters.
And here’s a daily chart showing a more tactical view of the same setup. Prices have decisively broken above resistance near 145 and momentum is finally overbought, signaling to us that buyers are in control. From a target perspective, as long as prices are above 145, the bias is higher towards 205 and eventually 264 over the coming weeks and months.
As long as prices are 115 on a weekly closing basis, this long-term bottom thesis is intact. From a more tactical perspective, if you’re working with a trading position and shorter timeframe, then 145 is the risk management level we want to be long above. If price are above that on a daily closing basis, then the path of least resistance is higher.
And if you don’t trade futures, we’ve got a stock below that we think will benefit from higher Natural Gas prices.
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