Lets fade the gap. I’m not counting on it today, but maybe by tomorrow. DGAZ is hanging in there nicely. If EIA is not overly bullish today, my hope is DGAZ gets to $106+ by tomorrow. Just have to wait a few more hours and see.
Weather is giving a look at more normal temperatures. Daily chart looks good, 2 hour chart, not so good. If we can break down today, should at least get that red line and meet the 20EMA.
2hr chart showing some support, which you might exit here to try for a better position. I will be holding DGAZ with the same stop at $85, this time I’m putting the stop on my entire position. I will be careful around EIA report time, 10:30am Eastern time. I may remove the stop during the report and manage it manually. I will post if I think I should dump it. I’m hoping if DGAZ bounces, we don’t get near $85 so I don’t have to make a hard decision. We’ll see how it goes.
Zooming out to the weekly chart, we can see gas pegging multiple MA here. The price gapped higher, and this is a common theme for falling back to “fade the gap”. I don’t have a lot of confidence that gas will turn around here. I am going to put a lot of emphasis on weather. Watching weather in relation to NG over that last couple years, it seems the hardest thing to occur is also the most desirable. When cold comes down across Canada and hits the Northeastern US. It has been rare to occur and seems impossible to linger in that one location for long, yet the cold remains in the forecast.
Going off of my twitter feed here, I bought DGAZ at $117.8 with 2% of funds, and didn’t take my own advice of placing a stop at $114.5. I added to DGAZ yesterday at I believe $88.8 with 5% of funds. This is not an ideal trade and I should consider another stop (at least on the 5%) at $85-$86 on DGAZ. I’ll leave it at that. If we do head back down, I’ll switch back to daily chart for potential support areas of NG.
It looks as though gas is heading for new lows. Fundamentals aside, this is a clear indication the market wants to go back down. Since we are coming up on the weekend, I don’t want to get carried away with taking a new position in DGAZ. I like 3% here. This is a very small position. A lot can happen over the weekend. Weather could shift cold again; this is not highly likely so I’ll take a short position today. Short meaning I’m going to buy DGAZ.
Now for a look at 2 hour chart. We are rubbing on the lower BB (Bollinger Band). I’d like to see some pull back, maybe back to $118 on DGAZ to buy. Another thought would be to take 1% now, and buy more if DGAZ falls some. I think placing a stop at 114.5 would be a good choice. Since we don’t have a lot riding on this trade, we just won’t worry about it.
I personally am going to wait. I may get busy and miss out, but 5 min chart is trending higher. I’ll post a trade alert if I make a move.
I’m clueless. It’s Thursday, it’s cold, it’s projected to continue to remain cold. If it does stay cold, we will continue to go higher. Did I mention it is Thursday and the price is elevated from where the market has wanted to trade it lately. If feel we could get a surprise to the down side today but I’m not going to bet against the market at this moment. I am interested in 1 trade. Wait for the report, and short if the price pops and breaks above upper BB on 2 hours.
If the price falls after the report from say the current price, this may be a reversal or it may just be a road bump. If the price falls today and continues tomorrow I’ll go short and maybe buy DGAZ with 3% of my funds tomorrow. The price could dip today and turn to continue higher. If it remains cold, demand will remain elevated, but it must remain cold. The longer this goes on, the greater potential for a surprise fall in price, but right now I”m not ready to bet on a true reversal.
Please keep in mind when I talk about something going up or down, know that I’m talking about gas itself. I mentioned DGAZ, which is the inverse. I will always try to reference gas when I’m talking bullish or bearish.
Last thing, I’ve made some changes, there is a menu, including an education page with the First steps I’ve written organized there.
First up, I’m not feeling the greatest, this always affects my ability to think.
Basically weather is still leaning bullish, Short positioning seems to be still in the mood to be setting records, and Pricing is back down around lows. Production got adjusted up yesterday by PointLogic. They do that every once and while. Basically gas production has been a little higher than what they were expecting. This increase in production is probably the most bearish factor and a key reason for prices failing so far this week. Not to mention, when prices continue to fail to go up during bullish weather forecasts, look out below. If weather is supportive of higher pricing and higher pricing doesn’t come… Weather can’t stay colder than average for long, eventually it will reverse and prices may suffer if they are only holding a range with bullish weather.
I have a couple of trend lines showing on this chart above, this could be tight support today, I’m not counting on it, but I am 27% in $UNG again. I will continue to layer in with each leg lower. Remember $UGAZ will slaughter you in winter with natural decay and roll decay. $UNG will sustain this much much much (3x) bettererer.
I drew a little different trend line pattern for Dec contract. I would be inclined to believe this one. A wedge pattern that I don’t really know what to expect from there. Weather might actually play a role, in either direction. If we continue to be cold for the next couple weeks and are projected to be cold from that point, maybe gas could break out upwardly. In an oversupplied market, cold has to work much harder than people understand. On the flip, if cold gives up and weather is average or warmer than average, gas could break down, rubbing on that lower BB. I’m still a believer in sub $2 gas and bankruptcies, and all that goes along with this… Including a huge swing in S/D and pricing if it comes to that. Oil is beginning to suffer, maybe we’ll get a repeat of 2014/15/16. Now I’m just rambling… I’ll add again if we reach the lower BB on Dec contract and I’ll reduce back to 20% if we get to that downward sloping trend line.