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Smart Money's Secret Signal - Commercials Loading Up on NattySmart Money's Secret Signal: Commercial Traders Are Loading Up on Natural Gas The natural gas market is displaying compelling signals that suggest a potentially significant bullish trend change on the horizon. Through careful analysis of the Commitment of Traders (COT) report and several other key market indicators, we're seeing a convergence of bullish factors that warrant close attention from market participants. Commercial Positioning at Multi-Year Extremes Perhaps the most significant indicator is the current positioning of commercial traders, who are now more long than they've been in over three years. Commercial traders, often considered the "smart money" in commodity markets, tend to have the most comprehensive understanding of supply and demand dynamics. Their extreme long positioning is a powerful bullish signal that shouldn't be ignored. Open Interest Analysis Confirms Bullish Outlook Recent weeks have shown a notable increase in open interest concurrent with price declines. This relationship between price and open interest becomes particularly meaningful when we examine who's driving the increase of OI. In this case, the increase in open interest is primarily attributed to commercial traders building long positions – a highly bullish indication that suggests strong hands are accumulating positions at current price levels. Contrarian Indicators Support the Bullish Case Several contrarian indicators are aligning to support the bullish thesis: -Investment advisor sentiment is currently very bearish, which historically has been a reliable contrarian indicator. -Small speculators are showing extreme short positioning, and this group tends to be wrong at market extremes. -Natural gas is undervalued when compared to historical relationships with gold and U.S. Treasuries. Technical Confirmation Signals The technical picture is adding weight to the bullish case: -The Average Directional Index (ADX) has triggered a buy signal, dropping below 20 while commercials shifted to extreme long positioning. -A bullish spread divergence has emerged between front-month and second-month contracts, implying immediate commercial demand for the front month, which is bullish. -A major weekly bullish divergence has recently confirmed, suggesting potential for significantly higher prices. Market Structure and Timing While these indicators paint a compelling picture for higher natural gas prices, it's crucial to understand that this analysis doesn't necessarily call for immediate long positioning. Rather, it suggests that the market is fundamentally "setting up" for an upward move. Traders should wait for confirmation through a daily bullish trend change before considering positions. The Power of COT Analysis in Trading The Commitment of Traders report remains one of the most powerful yet underutilized tools in market analysis. Understanding how to interpret this data, particularly when combined with other technical and fundamental indicators, can provide traders with a significant edge in the markets. While many traders focus solely on price action or technical indicators, the COT report offers unique insights into the positioning of the market's most informed participants. Ready to master the art of COT analysis and gain access to professional-grade market insights? Reach out to us today to take your trading to the next level. Risk Disclaimer IMPORTANT: The analysis provided in this article is for educational and informational purposes only and should not be construed as investment advice or a recommendation to buy or sell any security or derivative. Trading natural gas futures, options, or any other financial instruments involves substantial risk of loss and is not suitable for all investors. The market analysis presented here represents the opinion of the author based on the data available at the time of writing, but markets are dynamic and can change rapidly. Past performance is not indicative of future results. The indicators and analysis techniques discussed in this article may not work in all market conditions and should not be relied upon as the sole basis for any investment decision. Before trading, you should carefully consider your investment objectives, level of experience, and risk appetite. You should only trade with money you can afford to lose. It is strongly recommended that you conduct your own research and due diligence before making any investment decisions. You should also consult with a licensed financial advisor or broker regarding your specific situation. The author and the trading community mentioned may have positions in the securities discussed and may trade in these securities at any time.
NYMEX:NGF2025Long
by Tradius_Trades
Natural Gas is Ready For a Commercially Driven Bull MoveNatural gas is nicely setup for longs if we get a confirmed bullish trend change on the daily. -Extreme commercial long positioning (most long they've been in the last 3 years) - bullish. -Investment advisor sentiment very bearish - which is actually bullish. -Undervalued vs gold & treasuries - bullish. -ADX under 40 while commercials got extremely long - bullish. -Bullish spread divergence between front month and next month out - bullish. -Small specs at extreme in short positioning - bullish. -True seasonal & some cycles are not supportive of going long, but these are the last things I look at. Enough indicators are supporting longs that I'm not going to worry about this. -Bullish momentum divergence has triggered on some high timeframes, implying much higher prices are on the cards for Natty. There is also some smaller bullish weekly divergence currently setup (but not confirmed). Have a good week.
NYMEX:NGF2025Long
by Tradius_Trades
30% to 60% Upside Coming for Natty (Divergence Strategy)A powerful monthly bullish divergence just confirmed on natty. We see that the CCI had a monthly close which confirmed the bullish divergence setup. In this video I review how to determine targets with this strategy, and how to determine your risk. I anticipate a minimum 30% rally from current prices for natty, possibly heading up 60% from here. This doesn't mean this market won't have a pullback in the meantime. In my opinion, pullbacks are for buying until these price targets are reached. If you have any questions about this strategy, feel free to shoot me a message. Have a great week.
Editors' picks
NYMEX:NG1!Long
by Tradius_Trades
18
NATYY Bullish H&S StructureQuite clear H&S shoulder pattern has developed on NATTY which began accumulating at the beginning of March of this year. The green rectangle is the base of the massive accumulation zone which has acted as support previously, now turned resistance. There's been 2 prior attempts at breaking through, on the third, it broke but wasn't able to hold. The target is c15% increase in price and also takes us to the gap on 22nd Jan - this was calculated using the distance between the top and bottom of the cup. GOOD LUCK!
CAPITALCOMSB:NATURALGASLong
by SkyTrees
30
THREE WORDS THAT YOU SHOULD KNOW. NATTY GOES CRAZYNatty is a slang term for 'natural gas' or natural gas futures. Natural gas is among the most-volatile commodities, especially in contracts for prompt delivery. A big reason why is the demand for natural gas varies considerably based on the weather as it's primarily a heating fuel; though it's increasingly used in electricity production and that can also make it subject to swings on hot summer weather due to air conditioning demand. Increasingly, LNG demand also dictates the price of natural gas. Forecasters from Atmospheric G2 said last Thursday that above-average temperatures are expected for the eastern two-thirds of the U.S. from Feb. 6 to 10. Natural gas prices are also under pressure after the Freeport LNG natural gas export terminal in Texas announced in January, 2024 that it would close one of its three production units for a month for repairs after extreme cold in Texas damaged equipment. The closure of one of the power units will limit the export of natural gas from the United States and increase its supply. Front NYMEX:NGH2024 Natural Gas futures contract recently fell to all-time low, below $1.900 mark. An unusually mild winter reduced demand for natural gas and kept U.S. inventories high. Forecasters at Maxar Technologies said last Wednesday that weather is forecast to become warmer over the next two weeks from the Rockies to the Midwest. According to BNEF, Lower 48 States Dry Natural Gas production on Wednesday amounted to 104.2 bcf per day (+4.2% y/y). Demand for Lower 48 States Dry Natural Gas was 93.1 bcfas of Wednesday, according to BNEF. (+8.9% y/y), and net LNG flows to US LNG export terminals declined to 13.5 bcf as of Wednesday. (-4.2% by weight). Reduced U.S. electricity production will negatively impact demand for natural gas from utility providers. The Edison Electrical Institute reported Wednesday that total U.S. electricity production fell -8.1% year-over-year for the week ending Feb. 3, and total electricity production in the US for the 52-week period ending February 3 fell by -0.4%. The US Climate Prediction Center said there is a more than 55% chance that current El Niño weather conditions will remain strong in the Northern Hemisphere through March, keeping temperatures above average and putting pressure on natural gas prices. AccuWeather predicts also El Niño will limit snowfall in Canada this season and also cause above-normal temperatures in North America. Gas storage facilities in Europe were 71% full as of January 29, above the five-year seasonal average of 58 percent for this time of year. Baker Hughes reported a week ago on Friday that the number of active U.S. natural gas drilling rigs fell by -1 rig to 119 rigs for the week ended Jan. 26, just above the two-year low of 113 rigs recorded on Sept. 8. Rising to a 4.5-year high of 166 rigs in September 2022 from the pandemic-era low of 68 rigs recorded in July 2020 (data dating back to 1987), rigs number decreases again, since Q4'22. Recent EIA report showed in full accordance with expectations, a decrease in reserves of -75 bcf that is much less than the 5-year average for this time of year of -193 bcf. The main technical chart is for United States Natural Gas Fund LP AMEX:UNG ETF that offers straightforward exposure to front-month natural gas futures Basically this graph clear illustrates that disinflation era is still exists, as bearish sentiment is still prevails in the market since the Q4'022, after a key 5yrs SMA breakthrough. Perhaps this is the end, and market capitulation is almost right there, as it typically happens each time in long-term downward market trends.
AMEX:UNG
by Pandorra
5
CL WTI Crude Oil - Getting In Sync With The Market MakersIn late July I made a call that oil's actual target in the imminent term is not $100+, but actually a 3 or a 4-handle. Oil - A New Long Leg Down Soon Begins I believe that this long term analysis is still correct. However, price action has shown that the target was finally the daily gap at $85 and was achieved last week. Thus far in some 7 weeks of trading, oil has only gained $9. I likewise believe that before Natural Gas goes on its next bull run, it's going to violently abuse the longs with a raid under $1.8 NatGas - No Moon Until Doom But with current price action, we may get a false breakout over $3.1 before that can happen. A pump in energy and metals in September would be congruent with the thesis that equities are going to have a very red September as a setup into a Q4 that takes out the highs, which I outline here on the Nasdaq ES Futures: Nasdaq Futures - Are You Prepared For Red September? But the problem for retail traders is everyone is "practical" and believes that we're going straight up from where we are. It's a new bull market, some guy who works for some big bank and is tasked with engineering liquidity for high net worth clients and funds, told social and establishment media. Equity bulls need to give their head a shake, though. And so do energy bulls. With the U.S. being net short hundreds of millions of barrels from the Strategic Petroleum Reserve and the Fed reiterating that interest rates simply are not going to be cut until there's an international economic crash, the "long" trade only exists insofar as riding the wave that is intended to kill long term funds who are net short. If the scheme really is to rally like it's a new paradigm into Q4 and create a Bump and Run and then blow the world economy away in 2024 ahead of the next U.S. election, which Joe Biden will win because Donald Trump will die in prison, then there are significant risks. It's just like Burning Man where they decided to do a ritual sacrifice to the Azov cult in Ukraine and were met with a flood and rainbows and now are trapped in 6 inches of their own urine and feces and alkaline mud. What I mean by the above is that the best laid plans of mice and men always go awry, and this should be obvious to anyone who understands the situation in China with even a modicum of sobriety. Unfortunately, the people who understand China with a modicum of sobriety are almost nobody. Xi Jinping is an idiot who is still holding onto the Chinese Communist Party, the most murderous and worthless regime in all of human history. While Xi has never participated in the persecution of Falun Dafa's 100 million practitioners, which was started July 20, 1999 by former Chairman Jiang Zemin, and has even been killing the Jiang Faction as his real target in the Anti-Corruption Campaign, Xi is still the head of the CCP. When the CCP falls, Xi will fall with it and be impugned as responsible for all of the Party's sins in all of history. And this means that in the process of the CCP falling, Xi may show a glint of intelligence and wisdom and overthrow the Party himself, Gorbachev style, using the persecution as a weapon to protect the real China from being taken over by the International Rules Based Order that uses Taiwan as a proxy. What all of this means for energy and equities and really everything else is significant gap downs are ahead in the markets, and are likely to come at prices that are high but not that high. This is because if significant problems in China emerge and go viral on social media that Party West's propaganda machine are unable to suppress, it will disrupt the plan, and all of those long positions that are set to sell at high prices will turn around and start market dumping. This means you'll wake up one morning and see that SPY and QQQ are down 12% on market open, and this time, unlike COVID, you aren't seeing daily reversals for mitigation. Everyone will just be open selling to get into USD cash to run for their lives. Nobody will be around to maintain the bots, and every market will look like a cryptocurrency memecoin. So here's the trade on oil. We may see an immediate reversal at $85, where we are now. But I think the real target is $95, which will take out that effective daily bar double top printed in November of last year. That will draw in all the $100 call moonboys, since energy bulls are even more irrational than goldbugs. And they'll expire worthless as we head into the $40s to end the year while Apple prints $220 and Tesla prints $420 and NVDIA prints $480 (lolAIbulls). So if you want a trade heading into September, maybe we get a retrace to $82 on oil. Consider going long with a stop under the $77.60~ low. Sell at $95. Look for big dumps and go short on the retrace and hold into February for a $30 candle. Then get long for January '25 printing $150+.
NYMEX:CL1!
by LordWrymouth
Long on NATGAS throughout the month of AprilSeasonally, April is on average a bullish month for Natural Gas and looks to have set up for a similar outcome this year. It has made a huge double bottom on the daily with a extreme bullish RSI divergence and you can see a similar positive RSI set up on the hourly and the 4 hour chart as presented in my post. My target is modest 3 which would is the most recent resistance tested on the 3rd of March and a increase of 46%. Good luck!
CAPITALCOM:NATURALGASLong
by SkyTrees
12
$UNG Analysis, Key levels & Targets$UNG Analysis, Key levels & Targets NatGas is starting to look very interesting again… what a monster drop today, though!! I will be looking to get into a position tomorrow… I’ll update here with whatever long position I end up taking… I love trading natgas and it has been too long… —- I am not your financial advisor. Watch my setups first before you jump in… My trade set ups work very well and they are for my personal reference and if you decide to trade them you do so at your own risk. I will gladly answer questions to the best of my knowledge but ultimately the risk is on you. I will update targets as needed. GL and happy trading. IF you need anything analyzed Technically just comment with the Ticker and I’ll do it as soon as and if possible…
AMEX:UNG
by SPYder_QQQueen_Trading
1
NG - Natural Gas / The Dunk Tank$3 off the chased highs... plenty o' baggies looking for $10. Oops - surprise, rug pull. Could not have happened to a nicer bunch, completely cock sure the moon was within reach. Nope, Asteroid belt collisions saw to the demise of the SPEC, the CTFC even had all the clues one would ever need. But they know it all gassy traders ended up with tears for fears and sharks forcing the shart trade out the rear end. It was perfect. In Flay Shun baby~! Interrupted... for now. Well-timed, but more to come - right? Yep, fer sher. Patience always wins in Natty, $21 will arrive in time. It's just not time.
MCX:NATURALGAS1!
by HK_L61