Nat Gas Reaffirms Bear, Defines $2.51 as Key Flexion PointPosted 12/09/2019 7:59AM CT |
Overnight’s break below 02-Dec’s 2.289 low and our short-term risk parameter rendered early-last-week’s recovery attempt a 3-wave and thus corrective affair consistent with the still-unfolding downtrend from 05-Nov’s 2.980 high. This resumed slide defines 03-Dec’s 2.510 high as the latest (suspected 4th-Wave) corrective high the market is now required to sustain losses below to maintain a more immediate bearish count. Its failure to do so will confirm a bullish divergence in momentum and resurrect a base./reversal count that, again, we still believe could be major in scope. Per such this 2.510 high becomes our new key risk parameter from which longer-term players can objectively rebase and manage the risk of a still-advised bearish policy and exposure.
The daily log chart below also shows the market respecting former 2.47-to-2.51-area support, since broken on 29-Nov, as a new key resistance area the bear is now fully expected to sustain losses below per any broader bearish count. This reinforces the importance of last week’s 2.510 high as a pivotal level and condition around which longer-term traders are advised to toggle directional biases and exposure.
From a shorter-term basis, we’re identifying a minor intra-day low at 2.368 from 04-Dec in the 240-min chart below as the smaller-degree 1st-Wave of an eventual 5-wave sequence down from that 2.510 high and our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively rebase bearish exposure. A recovery above 2.368 would jeopardize the impulsive integrity of a bearish count that, with prices at historically low levels, warrants a more conservative approach to bear risk assumption.
While there’s no question that on all “practical” scales the trend is down, long-term players are reminded of an important combination of historically low levels of market sentiment and the market’s proximity to the lower-quarter of the past 10-YEAR range. This remains a slippery slope for bears “down here”, warranting a close watch of MOMENTUM and the bear’s ability to continue to behave like a bear with sustained, trendy, impulsive behavior lower.
As scary as the historically bearish sentiment levels are, we remind traders that sentiment/contrary opinion is not an applicable technical tool in the absence of a confirmed bullish divergence in momentum of a scale sufficient to break the broader downtrend. Herein lies the reason we’re placing such an emphasis on 03-Dec’s 2.510 corrective high. If we’re supposed to be short “down here” around 2.23-area levels ahead of further losses to at least the 1.60-area (for at least a 2:1 risk/reward ratio), then this market shouldn’t come anywhere near that 2.51 larger-degree corrective high. If it does, with an early warning coming from a recovery above our short-term risk parameter at 2.368, then a count calling for a major base/reversal will be resurrected, warranting a shift back to a bullish policy. While the market remains below at least 2.368, there’s no way to know how low “low” is.
In sum, a bearish policy remains advised for long-term players with a recovery above 2.368 required to pare exposure to more conservative levels and subsequent strength above 2.510 required to neutralize remaining exposure and reversed into a cautious bullish position. Shorter-term traders whipsawed out of bullish exposure as a result of last week’s bullish divergence in short-term mo are OK to consider cautious bearish exposure from suspected resistance from the 2.300-area OB with a recovery above 2.368 required to negate this call and warrant its cover. In lieu of such 2.368+ strength, further lateral-to-lower prices should not surprise. This said, overall, traders are urged to remain suspicious and flexible “down here”.