What will next week bring us? Hopefully, another profitable trade! The entry has been triggered, and we are on track to reaching our first target.
Q3 2021 hedge fund letters, conferences and more
The fundamental question is: are we witnessing a resumption of bullish factors on natural gas?
The price of gas hit its highest level since February 2014 in early October. Tight supplies and concerns about a rougher than expected winter in the northern hemisphere were the main propellants for natural gas. However, quite suddenly, a dip took place over the past week. Since exiting the key $ 5.00 per Million British thermal units (MBtu) support zone a week ago, it has fallen by more than 25% – more than 40% drop from its highest level in October.
Meanwhile, at the pre-open last Monday, I told our subscribers to get ready to go long around the $3.604-3.716 support zone (yellow band), with a stop placed just below the $3.424 level (red dotted line) and targets at $4.009 and $4.355 (green dotted lines).
As a result, gas prices contracted in stride while trading just into the provided entry area before the bull crowd woke up to push them back up in the following days.
In fact, with gas prices picking up momentum from Wednesday, the proposed trade entry on the Henry Hub futures is turning profitable (and getting closer to target #1).
Trading Charts
Chart – Henry Hub Natural Gas (NGF22) Futures (January contract, daily chart, logarithmic scale)
Now, let’s zoom into the 4H chart to observe the recent price action all around the abovementioned levels of our trade plan:
Chart – Henry Hub Natural Gas (NGF22) Futures (January contract, 4H chart, logarithmic scale)
In summary, my trading approach has led me to suggest some long trades around potential key supports, as this dip on natural gas offered a great opportunity for the bulls to enter long whilst aiming towards specific projected targets. If you don’t want to miss any future trading alerts, make sure to look at our Premium section.
By the way, for those of you who are interested in trading biofuels, please note that I recently wrote an article on this topic to diversify your portfolio. Alternatively, you can have a closer look at my selection of stocks and MLPs through our public dynamic stock watchlist.
Stay tuned – and happy trading!
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Thank you.
Sebastien Bischeri
Oil & Gas Trading Strategist
The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
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