The Monthly (continuous contract) Natural Gas pattern has failed.
CTRL-ALT – DEL
UNG: expect support in/around 10-12, wait for a WEEKLY/MONTHLY signal reversal and BUY.
Take note of the RSI – haven’t pulled this rabbit out of the hat in a long time but – someone take a look and check on me – but the RSI LOWS ARE HIGHER while the UNG LOWS ARE LOWER.
CMT II (I think) – this is an RSI reversal. It refers to a situation where the RSI indicator moves in a direction opposite to the price, suggesting a potential change in the price trend.
At this point, that’s our only hope … first time I have EVER seen this in my charting history …
Natural Gas is at a very key junction w/ regard to price and a bullish move.
This is based on the MAJOR buy pattern on the monthly shown below. That pattern hit w/ both PRICE and TIME and that is the reason this “huge support” shown is such a big deal on the Nat Gas.
For those of you suffering w/ me in UNG I offer this very well written piece that was published just recently:
While I was aware of these type of situations having once been a CTA (focused on spot currency markets), I did not think it would effect this opportunity in such a way. Full disclosure I bought UNG in/around the mid 9’s and ran it all the way up to 34 and STILL OWN IT. Why … ?
Well, it’s not good investing – check.
BUT (always the “but”) I want to ride a wave from the very beginning (or what I thought was a BIG LOW) and go thru the ups and downs to understand how my FEELINGS/EMOTIONS would not only be reflected in how I viewed the chart and it’s price action but also how it actually felt to live thru the emotions of fear and greed just like they talk about w/in the “psychology of Elliott Wave.” So far, they have been pretty accurate.
So, folks, this ones a loser. My gameplan is to look for a low … I have another target down in the 3’s believe that one or not but really watch this PATTERN on NAT GAS to see if it holds.
No regrets .. it’s been a great year but this one has most definitely been in the “other” category. I’m going to put the best strategy in the world to work – HOPE- and look for that bounce up to around my entry and then gracefully exit this science experiment. Unless, of course, greed gets a hold of me and somehow I think this thing is really going to rocket to the moon … yeah.
Well, the pain cave continues as I’m keeping my position and searching for a “low” in UNG. I’ve updated the count because recent price action has gone below the low made in 2021 (UNG) but, as you can see, the futures has not broken below the low. UNG and the futures “try” to go in concert but, as you can tell, they aren’t a “perfect” one for one match.
Man, to think I was holding this puppy up at 34 and ‘expecting’ a pullback … a complete wipeout, and now a losing position to boot? This is an example of horrible investing. Period. But, I’m sticking with it as I do see a low approaching or here.
I LIKE the MONTHLY MEASURED MOVE PATTERN THAT IS SHOWN BELOW. ITS A PERFECT MATCH IN PRICE AND TIME. But, that doesn’t mean it won’t fail, of course, but these MONTHLY MEASURED MOVES don’t usually fail. In fact, I’ve really never seen it happen. No kidding.
The UNG chart shows another (my counting is like my golf game, remember?) valid count and we are completely a “b” wave that broke the low but it “should” be bottoming here or nowish … there’s a subwave count I’m watching which I will update depending on what happens over the coming days/weeks. But, either way, the next major move “should” be UP for UNG.
We are tickling the 1.05946AB=CD and the 1.732 extension from ‘a’ (purple) … basically an ABCD into a 1.618/1.732 extension SHOULD provide support for the next move up .. BUT, it doesn’t have to.
I am using UNG as a proxy for Natural Gas futures.
Here’s the picture on Nat Gas (hourly) continuous futures:
As you can see, we are about to hit or have hit some very important support. An ABCD, 1.27 extension and the .786. We are still “well above” the very important cycle low we ID’d above. From the futures perspective, my thesis still stands that we are, potentially, at a VERY major low for Natural Gas for years to come.
That picture is a little bit more murkier when we look at UNG:
It would be nice to keep UNG above 7.00 … the KEY to this entire pattern is the Natural Gas Futures. Remember, we are looking at a near perfect MONTHLY pattern that has been exact in PRICE and TIME.
And, as I have said, multiple times in the blogs above – the thesis is wrong or on thing ice w/ a WEEKLY close below the lows.
That gap down was a bummer … but, we have found support and bounced nicely. As you can see above, any move higher will run into the wall of China above (big gap) and probably fail the first or second time. But, obviously, we want it to close up and above that entire area so that is the immediate resistance.
The “ideal” PATTERN we would like is the a-b-c EWT corrective sequence that will set up a GART BUY.
You know I don’t like to do the “could have would have should have” but there is some nice little coloring techniques/tricks in the chart above so let’s take a peak.
First thing is to note the ABCD (blue arrows) into the low .. then, we have both a .707 and .786 retracement level with a 1.618 extension. I also (which I like to do, alot) extended off the last low before the march to the high and that was a nice ratio from the equal octave scale of music : 1.3348. Then, one last, take note of the “gap area” because that defined the measured moves into the low. No kidding … then, those orange measured moves set up what? A three drives to a bottom BUY pattern. (blue triangles).
Measured Moves are the most underutilized YET most POWERFUL tool in our toolbox. I think people don’t use them because they clutter their charts w/ lagging, coincident indicators … moving averages, bollinger bands, oscillators, and 1000’s of other tools. Do they work? SURE .. but, just think about it, ALL of the techniques and tools we use as chartists (even the esoteric stuff) is all contained in what? THE MEASURED MOVE.
This measured move is so nice BECAUSE it’s EXACT in both PRICE and TIME.
Add that to the count shown and the PATTERN present we have a very high probability trade. Right now, we are only risking a dollar. Trust me, we have time get into this move but the longer you wait, the more your risk will increase.
This analysis is wrong and would stop out with a WEEKLY close below 7.00.
Other “proxies” are showing amazing measured move synergy … in this case, from a percentage perspective using log scale.
note, added the measured move (mm) + .618*mm to equal first leg down
Here is the “final” count I’m going w/ in regard to UNG.
Let’s add this up …
Futures contract measured move – exact from a MONTHLY SCALE
UNG and BOIL percentage measured moves – exact
The 1.68179 extension hit after 233 calendar days … a Fibonacci harmonic
ABCD hit as the same TIME the extension pattern hit
The “count” on the way up violates no rules …
Note, because the all time low clearly went thru the prior low we CANNOT label this as wave 2. The form/structure sure looks like a “B” wave …
Net-Net … this has all the markings of a VERY powerful beginning of a 2+ year move and right now the risk reward is 35:1.
It’s been a while since I blogged about Natural Gas. And, what a ride it has been …because those of you who have been following me for a while, know that I got into UNG around 9 bucks almost two years ago and -GUESS WHAT – I’m still holding it! Yes, probably the dumbest thing I ever done because I was up a NICE 5 figures and counted and watched precipitously as it just took it all back.
Again? Why?
Because when I bought the darn thing I “felt” or “knew” that this was going to be a MAJOR low in Natural Gas and I wanted to put REAL money at risk and basically ride a multi-year wave like I do surfing.
The thrill of the great waves – this run had it!
The beat down inside w/ the ice water fist to the face – yup!
No waves at all – sure.
So, guess what, I’m riding the waves of UNG for years …
In the next post on Natural Gas I’ll go into the count and the PATTERN that was present and all that. But, for now, just check this one out. I JUST saw this last night. No kidding, going to enjoy a little sun this AM before another deluge in San Diego and GET THIS – just an hour away from me (Julian) they are forecasting 10″ of SNOW. Going to be a wild weekend … a perfect time to do some charting and, ugh, taxes.
THE POWER OF THE MEASURED MOVE … not only is this MEASURED MOVE equal in PRICE it is EXACTLY EQUAL IN TIME.
Get LONG and look to leverage/ architect a position to expire in 2027 w/ a price target of 15-16 or…not.
I know this analysis might throw some of you … but, I truly LIVE by the Measured move and the potential here is somewhat analogous to this:
well, if your along for this ride you might start questioning the long thesis – I’m not there, yet, due to my entry down in/around the low 9’s … but, certainly looks heavy.
for now, we stand w/ our thesis that the low 89’s was a major low and this is a retracement in a wave 2 or B-wave w/ a rally to come.
I do like the support found from the polarity log trend line …
staying long …
here’s a look at the NAT GAS continuous futures contract … note, we’ve completed the “largest” move up since 2005 (blue lines) … reasonable to expect a move up like the orange ones from the past?
the game plan/strategy is to BUY the first PATTERN in a “new” trend and if it works then probability is that the trend change is real …
Energy, Ags, etc. are exploding of late and GLOBAL shortages that are becoming apparent pretty much every day are REAL. so, if one thinks (trade what you see not what you think) that Nat Gas prices are due to continue to rise then we have UNG that will give you exposure.
if we break thru the low at 13 then I would consider this a failed pattern but we have some MAJOR support coming in/around 15 for the BUY to get long nat gas and, perhaps, hold this position for a LONG time …
it’s all probability folks …
below, you will see a MONTHLY on UNG since inception. wanted to post this chart so you could see why I wrote the above .. have we broken out in Nat Gas? have we begun a new bull trend? full disclosure, I’m long UNG down in the single digits and will be looking to ADD to my position at this pattern completing – if it ever does.
take note of the volume picking up and the fact that the RSI is at it’s highest level .. the key here, in the coming ongoing pullback, is where the RSI finds support … if we find support on the BULL ZONE (around 40ish) then we can start giving our change in trend some more probability … but, for now, we are speculating that a very investable low is in place .. don’t throw the farm at this one .. nibble at it … as we will see the breakout occur and there will be more time to get LONG if the “low in place” thesis is correct.
additionally, the “length of the base equals the price target potential is also nice here .. we’ve been basing for 6 years and, if you want to split hairs probably 10 years once that low was put in place 2012. bottom line, if this things goes higher, it’s going to go ….
another way to check trend is via long term LOG charts .. LOG’s help you understand rates of change and are very good at giving first hints of big changes in trends or inflections …in looking at this on the long term log scale, certainly appears to have broken the long term log trend line …
last, when you are building a position, it’s wise to see how “strong” or “weak” that security is compared to high fast flyers .. in this case, for no other reason than randomness, I chose UNG/NFLX.
yup, Natural Gas has out performed (on a relative strength basis) NFLX for all of 2020
