Tuesday, June 8, 2010

Natural Gas Review

Natty has been given less attention by me lately as equities and almost all other asset classes have begun a historic move back down after the last year's corrective rally. A fresh look is overdue.
To put it in context pls see:
Sept.4 2009 Monthly Bar Chart NG
Dec. 29. 2009      Natural Topping Out?
Jan 8 2010   Natural Gas Update
Apr.27.Natural Gas
In general I believe that NG is in the middle of corrective abc down from the 6.11 spot mo. high made in the beginning of this year. It  likely has another leg down from here BUT..

The 2.40 low of Sept. 09, an 85% pullback from the all time 15.70 high, will likely hold, or IF exceeded, will be only marginally , ie 1.95 the C=A.
click to enlarge
The ABC down took 3.75 years, the abc up from 2.40 to 6.11 took 4 mo.s. and has yet to achieve even a .382 retrace of the C down.

 click to enlarge
Could it be done on the downside with new highs over 6.11 imminent? Maybe ....BUT
click to enlarge
It looks like a series of abc's up from the 3.82 lows , retracing 50% of the initial move down.
In the most recent abc structure c= 1.618 of the a, and the second abc series is roughly 2x the first abc series.
 Taking out the 4.606 level would give weight to the interpretation of another structure down being underway.
On the upside the .618 retrace of 6.11 to 3.82 is at 5.24.
On the downside a .78 retrace of 2.40 to 6.11  is 3.22
And if the next structure down begins from 5.00 it will equal  .78 of the 6.11 to 3.82 structure at 3.22, as well. 
















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