Typically when looking for trades we’re searching weeks and months out, but occasionally the reward/risk in a setup justifies trading the shorter-term timeframe.
Today, that trade is Natural Gas.
Here’s a daily chart of Natural Gas, which fell 60% from its 2018 high to its August 2019 low. Since then, prices have been meandering around those lows, with momentum staying in a bullish regime. This week, prices are attempting to break back above broken support at 157 which would confirm a failed breakdown and shift the reward/risk back in the bulls favor.
Click on chart to enlarge view.
This type of failed move traps sellers and creates a natural buyer if prices can get back above support at 157. We’ll define our risk against that level and look for a move up towards 200, at which point we can reevaluate and see if our secondary target of 225 is in reach.
This is a counter-trend move so it’s low probability in nature, but given the few points of potential downside and 40+ points of potential upside, it’s worth taking a shot on the long side.
Thanks for reading and let us know if you have any questions!