Trail S-T Risk Level as Nat Gas Nears Upper-Range

August 26, 2016 3:25AM CDT

Yesterday's continuation of the past couple weeks' rally leaves yesterday's 2.749 low in its wake as the latest smaller-degree corrective low and new short-term risk parameter the market now needs to sustain gains above to maintain a more immediate bullish count.  Its failure to do so will confirm a bearish divergence in short-term momentum and expose another intra-range correction that would threaten our specific bullish count and long exposure from 2.585 OB recommended in 19-Aug's Trading Strategies Blog .  Per such, traders are advised to trail protective sell-stops to a level just below 2.749 as our new short-term risk parameter.

Natural Gas 240 min

Natural Gas Daily

This tight but objective short-term risk parameter at 2.749 may come in handy given the market's re-engagement of the upper-quarter of the past couple months' 2.99 - 2.52-range shown in the daily log chart above.  From a longer-term perspective the importance of the past couple weeks' rebound is that it renders Jul-Aug's 2.990 - 2.523 sell-off attempt a 3-wave affair.  Left unaltered by a relapse below 12-Aug's 2.523 low, support and key risk parameter, this 3-wave setback is considered another correction within this year's still-developing major uptrend ahead of eventual new highs above 2.990.  While 01-Jul's 2.990 high remains intact as a resistant cap however, the interim challenge is navigating further lateral, choppy, intra-range trading if this corrective/consolidative range has further time to mark.

These issues considered, a bullish policy and longs from 2.585 remain advised with a failure below 2.749 required to defer or threaten this call enough to warrant a move to the sidelines.  This conservative approach will keep some bullish powder dry for a long reset from the lower recesses of the range thereafter where the risk/reward merits of the play will be more favorable.  In lieu of such sub-2.749 weakness at least the intermediate-term trend remains intact and should not surprise by its continuance or acceleration to eventual new highs above 3.000.

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