RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The market posted another new low just yesterday for the 6-week plunge from 12-May’s 3.53 high in the soon-to-be-prompt Aug contract.  The clear and present trend remains down.  However, a number of factors are coming together to warn of a pending bottom.

The past couple weeks’ continued erosion maintains 07-Jun’s 3.127 high as the latest corrective high and key risk parameter the market needs to sustain losses below to maintain the simple downtrend pattern of lower lows and lower highs.  Former 3.000-to-3.100-range support is considered new resistance.  In lieu of strength above 3.127, further losses should not surprise.

Aug '17 Natural Gas 240 min Chart

 

Aug '17 Natural Gas Daily Chart

However…three factors have developed that pose a threat to the bear, including:

  • the nicely developing POTENTIAL for a bullish divergence in momentum
  • the prospect that Jun’s phase of the slide is the completing 5th-Wave of an Elliott sequence down from 12-May’s high as labeled in the daily log chart above
  • yesterday’s 2.875 low being the exact (2.878) 61.8% retracement of the Aug contract’s entire 2016 rally from 2.417 to 3.624 shown in the weekly linear chart below and
  • the market’s position at the extreme lower recesses of the 3.624 – 2.815-range that has entrapped it for the past YEAR.

In sum, a bearish policy remains advised with short-term strength above 3.000 warranting paring this exposure to more conservative levels and subsequent strength above 3.127 required to jettison the position altogether ahead of a correction or reversal of the May-Jun collapse that could be significant.  In lieu of such strength further losses remain expected.

Aug '17 Natural Gas Weekly Chart

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