Thursday, June 28, 2012

Natural Gas Update

At the time of the previous post, Natty and Chesapeake from May 17, NG was trading around 2.65.
Basically the analysis was looking for an imminent pullback and viewing it as a buying opp prior to at least one more move up.
" So 2.27 and 2.20 can be seen as excellent opps for entry, especially if the move down is choppy."
Not bad, so far. But ....
click to enlarge
Note the negative divergence on the Daily RSI.
This move up is structured in abc's, not unexpectedly. It may be nearing completion with y=w around 3.05 and currently looking a little overbought.
A close watch on the nearby Fibonacci retrace points will be useful, and an overlap of 2.68 ought to raise red flags for the current move up from 2.50
Will that be it ? Are new lows under 1.90 around the corner? 
A huge collapse in equities markets would no doubt exert serious pressure, and an X wave down can be deep. 
However another series of abc's up is very plausible given the long term importance of the 1.90 low.
So once again a Fibonacci .62 pullback to around 2.30 would represent an excellent entry opp prior to another abc up.  

From the  May 1 Natural Gas Catches a Bid
" If the leg down from 5.00 is a complete 5 count, then a .382 retrace to 3.09 would be a modest expectation, EVEN IF this is merely a corrective upswing.
And there is reasonable doubt that this is corrective; again see  Natural Gas Hits Long Term Target
Note the weekly RSI and MACD have lots of room to continue moving up.

PS the .382 retrace of the entire ABC move down from 15.78 to 1.90 comes in at 7.20
Is that likely? I wouldn't have thought 13,300 on the Dow likely 2 years ago."

Monday, June 18, 2012

Perfect Fade

After a classic zig zag correction up, the SP presented the perfect opportunity for a fade overnight.
That opp still exists, although it is slightly below it's overnight highs as I write.
 click to enlarge
It is possible to count 5 subwaves down from the highs of 1422, labeled wave 1.
The corrective 2 wave retraced roughly 50% of that move down. It is no longer oversold .
And now we come to the main point; the next wave down of similar degree will be a 3, commonly the most dramatic move often achieving a Fibonacci multiple of the preceding 1st wave.
So 1.618 x 155= 250 SP points, Or 1097 from the overnight highs.