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

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.

Natural Gas Active Weekly


< Back to Articles & Videos

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.