NG

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.]

2015-12-14 NG daily fcst 1300

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.  2016-03-28 NG daily fcst 1102I 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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