NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE / Commodities / Natural Gas

First, we want to say “It took long enough!” and we’re happy to see this upside move in Natural Gas.  We had been calling this move for many months.  Our predictive modeling systems and cycle systems suggested the extended bottoming formation in Natural Gas was an excellent opportunity for skilled technical traders.  Today’s big move suggests the downside price pressure is dissipating and a new bullish price trend may push Natural Gas prices above $2.85 quickly.

Our research team spotted this potential setup in April and May articles where we correctly predicted an NG rally in April (it did!) and new upside targets for NG in May. We have been keeping our subscribers up-to-date with UNG as this bottom has played out.

The upside move in late April 2020 was a cycle move that we expected to continue a bit higher.  It still presented a very nice opportunity for skilled traders to capture a 35% upside price swing.  The current, deeper, price bottom near $1.43, represents a very deep rotational bottom in Natural Gas and the current upside price move may be just starting.  Our researchers believe the initial target for this move is $2.85.  After that level is reached, if the trend continues, a higher target near $3.65 could become a very real price target.

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NATURAL GAS RISE IS STARTING EARLY

Historically, August has not been animpressive month for Natural Gas.  Overthe past 24~25 years, August represents a muted average upside range of $0.52and an average downside range of -$0.73. These monthly historical cycles suggest an almost even split with 12months moving higher and 13 months moving lower.  Yet, when we move to September, thingschange.

September on the other hand has historically presented a very strong upside potential in Natural Gas with an average upside range of $0.69 and an average downside range of -$0.22.  This suggests the upside potential in September is nearly 300% larger than the downside potential.  Additionally, over the past 24 years, Natural Gas has moved higher 16 months and lower only 8 months.  This suggests the upside price rally in September is nearly a 2:1 certainty.

Quite possibly, the extended bottomingformation in Natural Gas over the past 3+ months is setting up an early rallymode where price levels may move towards our $2.85 price target, then stallheaded into September.  Once Septemberarrives, Natural Gas prices may begin another upside move pushing well abovethe $3.50 level.

The $2.16 level represents criticalresistance right now.  It is very likelythat prices will stall near this level before attempting a bigger movehigher.  Supply issues may present asituation where prices breach this level quickly though.  Once the buying rally sets in, Natural Gascan move very quickly, over a few weeks, to incredible peak levels.

Skilled traders who were able to navigatethis bottom and get into positions in UNG or futures will likely be verypleased with what we believe will be a moderately easy 40% upside move.  The UNG trade will begin to accelerate higheras Natural Gas clears the $2.85 price level.

Play this trade cautiously as it progresses – pulling 30% to 60% of profits moderately early to protect against the eventual “peak and sell-off”.  If you know anything about Natural Gas in a rally mode, it should be that the peaks can be incredible, but the eventual sell-off can be very quick and dangerous.  Take your profits and be happy you caught a good trade.

September may be a big surprise for NG traders with a really nice upside price move that no one expects right now if our research is correct.

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Chris Vermeulen
www.TheTechnicalTraders.com

Chris Vermeulen has been involvedin the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader,and is the author of the book: 7 Steps to Win With Logic

Through years ofresearch, trading and helping individual traders around the world. He learnedthat many traders have great trading ideas, but they lack one thing, theystruggle to execute trades in a systematic way for consistent results. Chrishelps educate traders with a three-hourvideo course that can change your trading results for the better.

His mission is to help hisclients boost their trading performance while reducing market exposure andportfolio volatility.

He is a regularspeaker on HoweStreet.com, and the FinancialSurvivorNetwork radio shows. Chriswas also featured on the cover of AmalgaTrader Magazine, and contributesarticles to several leading financial hubs like MarketOracle.co.uk

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