Thursday, December 3, 2009

Natural Gas Long Term Risk

As discussed many times on this blog, the long term Elliott Wave structure of NG has an A down from
15.78 to 4.05, a B up from 4.05 to 13.70, and a C down from 13.70 to 2.40. The total move down was
a simple 85 % decline from the highs, and  took 4 years. The 2.40 low may well be it for the spot month  for a long time, at least intermediate term. Please see Sept. 4 post,  Monthly Bar Chart NG

The move up from those lows has an intermediate term A at 5.35 and we are currently correcting from those spot chart highs, and likely will see at least another C wave up.
So if the spot month chart is currently completing a "c" of  intermediate term B structure down from 5.35,
it is not a bad time to be scaling out of Jan / Feb shorts etc, esp since mo contracts are making new lows and the roll is relatively flat. The ' c'='a' on the current count down at 4.15, the low of  the "a" of  B and the Dec contract low. And this B down will retrace 50% of the 2.40 to 5.35 move at 3.88.

The likely Fib relationship of C equal to 2.95 or even 1.618 of 2.95, for targets 7.10 and 8.92 respectively from say 4.15 highlights the upside risk potential.

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