Updated: Mar 28, 2016
We’ve had a nice run with natural gas. Last September, with NG at 2.766, we identified 2.00 as an attractive target for a bounce (the red dot below.) Six weeks later, NG not only tagged 1.948 (a nice 30% drop) but, once there, proceeded to bounce 26%.
When the bounce fizzled and NG again plumbed new lows, we took another look and proposed a new downside target. From our December 14 update:
When long-term support is broken like this, we have to look to intermediate and short-term channels and Fibs — which, in this case, aren’t terribly bullish. Note the well-formed falling gray channel in the chart below. It’s been guiding prices lower since 2014 and suggests 1.632 by year end [the white dot.]
As it turned out, NG only reached 1.684 before the plunge protection team working the O&G complex decided they didn’t want it plunging below the 1999 lows. It was an impressive bounce, sailing up past the November highs. I chalked it up as yet another centrally-managed price fixing designed to give the illusion of a healthy market. And, that’s how it played out.
The bounce failed almost as fast as it formed, and NG ended up tagging 1.632 after all — just a couple of months late. Again, it saw a nice bounce off our target; and again, the bounce has started to falter. Is our next downside target still in play?
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