Monday, May 5, 2014

Is this a "Bearish Outside Reversal" in Natural Gas?

June Natural Gas (NG.M14.E) opened sharply higher in Sunday evenings session, but since the open prices plummeted to a 5 day low. The sell off confirmed a bearish outside reversal ahead of today's U.S. session. June Natural Gas futures remain under pressure from last week's EIA storage report that showed a larger than expected supply build of 82 bcf. Recent weather forecasts have been calling for warmer temperatures across the country which could limit the size of upcoming supply injections.

In recent weeks, we have been in a sideways trend in the June Natural Gas Market as the market decides on which direction it is headed next. The technical analysis in Natural Gas points to bearish in the near term, making way for a potential swing trading opportunity.

In today's trading session, I will be looking to sell June Natural Gas futures at 4.660, or a breach of the 20 Day Moving Average. This breach would confirm the outside reversal in today’s trading session. My first downside target would be 4.500, a recent area of support in the market, at which point I would roll stops to break even. If the 4.500 are is hit, then I would look at 4.380 as my next target, which would be support from the long term trendline. To mitigate risk on the trade, stop loss orders should be placed just above today’s trading range and rolled behind the trade accordingly.

See you in the market!
 Posted courtesy of James Leeney and our trading partners at

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