Wednesday, March 9, 2011

Natural Gas Update

Whats up with this triangle?
Active Mo.

First a little context;

The Rorschach ;

click to enlarge
The Natural is structured in ABC'c . The most recent major low at 2.40 was a Fibonacci 85%  pullback ABC from 15.70 lasting 44 mo.'s. The C = .97 of the A. The current move up is NOT a 4th wave as it overlapped the 4.05 low of the A. Therefore it is a fresh ABC structure up and has only run 17 mo. It is also shallow. These ABC structures  typically run years, and thus far the move up from 2.40 has not been big enough or long enough. Check out the mini fractal above.

With respect to the above "triangle" , the 2.40 low is very likely to hold. So when is it going to break up, and how far CAN it go down?
The low on Oct .22 of 3.28 was a Fibonacci .76 retrace of the 2.40 to 6.11 structure.
If it were to make a new low, the .78 retrace of that same structure is 3.22, and the .85 retrace 2.96.

 Active Mo Daily

Meanwhile the move down from 4.88 on Jan 24 can be described as having 5 waves, as can the sub wave down from 4.10 on Feb 28. So a bounce ( at a minimum) could be expected. Fib retrace of that last leg of .618 is at 4.44 , and 50% 4.30, there is also a little gap i think 4.27/4.28.
What the move up does at those points will be good indicators of potential nature of the move up, corrective or impulse.

Oh Yeah. How 'bout that O.I.?
With short O.I. like this any number of events can trigger short covering...weather, cross commodity spread liquidation, margin changes etc.



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