Monday, April 27, 2015

Natural Gas Lows And Upside Targets

Well, it's been a long time coming . The Natural Gas has a 61.8 % move down from the $6.50 high at  2.48.
As it happens there is also suggestion of basing at this point.
Daily
 click to enlarge
Note the positive divergence on the RSI. 

Weekly
click to enlarge
Note the positive divergence on the weekly RSI and upside crossover on the MACD.
The 2015 downwards chart action can be described as a diagonal 5th wave. 
Short and Medium term risk are decidedly to the upside for NGM with  potential to the downside limited to previous lows 2.47, 2.44 and at 1.90 and that would be a very slow grind from the looks of things. 
Note the volatility of previous rallies, late Oct 2014 and mid Jan 2015.

So medium term targets on an upside reversal can be easily measured to 3.35ish, a .38 retrace of the last leg and the gap. The 50% retrace comes in at 3.55.
Longer term targets require an opinion on the structure of the move down from 6.50...if it is a 5 wave count than it must be an "a" ( that would imply the more conservative upside target) .
The .618 retrace of 6.50 to 2.47 is $4.96. Most likely any "b" wave up or "2" wave will become difficult to trade but a 100%  move might be worth it.

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