Natural Gas is the biggest mover across futures markets as a risk-heavy week including multiple central bank statements and the monthly labor report begins.

KEY CHART POINTS

The NYMEX futures contract violated chart support at 3.529 overnight and is trading in an air pocket until a floor at 3.316, based on the lows in January and February. Momentum is in a natural position to weaken. As price stabilized in July, the fast RSI average rose and edged above the 50 midline. It then turned down as the recovery in price failed. This often happens before a downtrend resumes following a consolidation or countertrend lift.

DON’T CHASE MOVES

At miAnalysis I advise swing traders never to chase moves that are already accelerating. The reward potential in these situations is high but so is the risk.

I see two scenarios to consider for those who trade natural gas futures or UNG (United States Natural Gas Fund). The first is to target short entry after a countertrend lift or a consolidation. This would show some buyers were satisfied and reduce the risk of entering the market just before a bout of short covering. The second is to target long entry if price stabilizes after a test of chart support at 3.316.

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