Thursday, December 9, 2010

Natural Gas Update

Natty cranked up to near levels that can be seen as significant resistance for an initial abc structure up from the 3.28 lows.
Continuation Daily
click to enlarge
The key points here are the c=1.03 of a, and the move up from 3.28 now equals .36 of the 2.40 to 6.11 abc structure up from the lows last year. NG has also retraced 48% of the 6.11 to 3.28 move down. None of these Fibonacci relationships are hitting the mark exactly ( often the case) but taken together they suggest extreme caution regarding expectations for further upside from here, at least medium term.
Though not shown on the above , the daily RSI is also showing slight negative divergence at the high, and the slow stochastic is rolling over. 
So while this may be still only be the beginning of a more robust structure up that occurs over the next  couple years, an X wave down is to be expected at some point. Additionally the avg seasonal  price peak is Nov 20,  so it's right in there.
If this top is in here an X wave could easily retrace .62 of the move up from 3.28, to target 3.80.

Shorter term;
Hourly
 click to enlarge
Again note the negative divergence on the RSI
If the rally is to continue than this last leg up needs to NOT be overlapped at 4.35. And while there has been a very difficult series of that lately, with a potential abc up in place , seasonal factors etc. this contract needs to provide encouragement to the bulls here, or else.
Overhead there is resistance at 4.70 and 5.07, the .382 and 50% measures of the first abc up from 2.40 to 6.11
So all in all looking for the X wave to develop now  .


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