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Natural Gas (NGS) / US DollarNatural Gas (NGS) / US DollarNatural Gas (NGS) / US Dollar

Natural Gas (NGS) / US Dollar

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Bullish Bet on Natural GasOversold on multiple time frames (daily, weekly). Bullish MACD divergence, waiting on a follow through. Two daily Hammer candles indicate dip buying. Gaps at 4.398, 6.416. On the fundamentals side, Freeport LNG has started the re-opening process. I expect a sharp rise in Natural Gas price as it gets closer to fully operational as there's big discrepancy between spot prices in the US and the EU/Asia. Other US export terminals are planned for later this year (Alaska, etc..). Cold weather in most of the US should increase storage withdraw, though it remains unclear if cold front will persist deeper into February. See also $HNU, $BOIL, $UNG.
NLong
by wealth_bakery
1
Natural Gas: Dirt Cheap!Hello friends. Natural gas is dirt cheap! The price has fallen from the highs by an incredible 70% as the market came to realize that there was no winter crisis coming and was forced to unwind the overly crowded long trade. If you remember, people were expecting there would be a massive shortage of natural gas during the winter, and the herd was positioned long to take advantage of this. Since the herd is usually wrong, and since natural gas was objectively way too expensive, we had shorted it near the highs and made some money on the way down. Now things have changed again, and we will re-evaluate our positioning and share the reasoning behind our trade. Here we can see natural gas priced against crude oil, an incredible pair due to the fact that it has worked 100% of the time to predict that the pair will move from supply to demand and back again over and over with the one exception of the time when crude oil briefly went negative due to extreme circumstances during Covid. This chart tells us two things: Crude oil is expensive (relative to natural gas) and will likely fall in price Natural gas is cheap (relative to crude oil) and will likely rise in price Now, we are not taking a pair trade and completing it with a short crude oil leg for several reasons. (We are only long nat gas, with no short side on crude oil). The main reason is that we are overall bullish on commodities, and we have a good basis for this idea. We think commodities overall will rise substantially over the course of the next several months. Take a look at our chart of commodity prices which features crude oil, wheat, lumber, gold, and lean hogs. Something from each big sector to show us the live prices and general trends of commodity markets. It has fallen dramatically by almost 50%, despite many grand claims of inflation by people who are using lagging indicators and/or who are just clueless altogether. Our chart essentially shows the live inflation rate, which is widely ignored. If we were to use this index to measure inflation, we would find that the actual inflation rate during 2022 was about -25%. Extreme deflation, as we predicted long ago, and made a profit from. The fed will see this at some point, and they will realize that since they have completely obliterated commodity prices by slashing them in half it's time to stop deleting dollars + hiking rates, and start considering a pivot. There is no need to crush commodities even further, since the real goal is price stability, and deflation is considered to be far worse than inflation by economists. (We don't totally agree, but that's what they think, and the Fed will want to avoid deflation at all costs). Price controls supply and demand, which makes commodities perhaps the most mean-reverting asset out of everything. Production will be reduced because of lower prices, and consumption will rise. The ultimate effect is price bouncing. Another key point, China has reopened. This is a massive bullish signal for the commodity markets because they consume such a massive amount of commodities in the process of being the global center for almost all manufacturing (most things are made in China). As a result of this, China consumes more energy than anywhere else on the planet. This means China's opening up will increase demand for commodities broadly and should push prices higher. The thesis is supported by past evidence, and we can see that commodity prices often follow the MCHI China ETF. Considering the China ETF has rallied over 50%, commodities should follow later. Trading plan We will go long on the US Natural Gas futures market with a settlement date of 3/29/23. The trade has an entry price of $2.90, a stop loss of $2.50, and a take profit of $3.50. Note that the price is slightly different on this futures contract compared to the spot price. (This is a normal occurrence in futures markets). The trade has been given a decently high size because we think it has a substantial edge and we like to size trades according to the edge we believe they have. We are relatively good at estimating how likely a trade is to win. Thanks for playing.
PEPPERSTONE:NATGASLong
by bowtrix
6