Tuesday, July 19, 2011

Natural Gas Elliott Wave Count

The Natural Gas has been going it's own way since Jan of 2010. Divorced from the influence of USD weakness, it has reflected the overall domestic macroeconomics of over capacity with little growth.
That may be about to change. 
Natty has slowly but consistently been making higher lows and higher highs for the last 9 months and in the process it has taken out  one descending trend line after another.

Active Mo. Weekly
click to enlarge
Meanwhile it has held the ascending trend line and begins an upward sloping channel.
Active Mo. Daily
 Click to enlarge
Note the recent "c = .78 of a"  Fibonacci relationship of the legs at B; likely completing a second series of abc's.  While there could be a third series of abc's, taking natty even deeper into the apex of the triangle, downside opportunity is limited given the current structure and the long term significance of the 2.40 low.
Here's the Elliott count.
 Active mo. Weekly
 click to enlarge
As can be seen above even a rather modest "C= .618 of A" delivers a 42% pop from  here. 
And C=A, to roughly retrace 50% of the preceding leg down around 8.00, would not be an unusual outcome. 
Active Mo. Hourly
Note the negative divergence on the 14 RSI at the highs.
This could be an abc up or a 1,2,-1-,-2- set up. Holding the 50% retrace of the last leg and fresh highs would help the bull case obviously.
PS. Last weeks spec shorts were getting back to the high end of the range. 




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