In our September update [see: Sep 14 NG Update], we identified some bounce targets that would naturally follow the completion of a Bat Pattern in natural gas. But, we also noted that NG, like oil, was being suppressed in order to facilitate the yen carry trade.
But, like CL, NG is being artificially suppressed in order to facilitate a cheaper yen. When it comes to Japan, it remains to be seen whether central bankers can handle that kind of inflationary pressure.
If, instead, they wish to manipulate it lower, the white channel bottom down around 2.00 would make a nice downside target.
Six weeks later, NG tagged that downside target — dipping slightly below it to 1.948, a stunning 30% drop. The 26% bounce to 2.48 in mid-November was nearly as impressive. When NG retraced a 78.6% of that rise last Friday, I didn’t think too much about it. It was due for a bounce.But, this morning, NG gapped down to 1.862 — a low not seen since March 29, 2009, a few weeks after stocks finally bottomed out.
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