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LNG1! trade ideas

Long Gas Short Oil on Nuanced Macro ConditionsWhen prices diverge, like shadows in the night, spread trading strategies unfold in plain sight. WTI Crude Oil (“US Crude”) and Henry Hub Natural Gas (“US Nat Gas”) Futures have diverged recently. US Crude prices continued sliding amid easing supply concerns and weak demand from the US and China. Meanwhile, US Nat Gas prices rose steadily on rising demand, shrinking storage surpluses, and rising exports. As OPEC+ weighs delaying output hikes and gas producers reduce supply, energy markets remain volatile, presenting interesting trading possibilities. WTI CRUDE OIL HITS NEW 2024 LOW AS SUPPLY DISRUPTION CONCERNS EASE The US Crude Oil has posted two consecutive monthly losses owing to a weak economic outlook. US Crude prices briefly rose on supply disruptions in Libya and heightened tensions between Israel and Hezbollah. With tensions easing and the expected resumption of Libyan supply, prices dropped sharply as the risk premium diminished. Reuters reported that the cartel is considering delaying the hikes to support the US Crude prices. Yet downside risks loom large due to weak manufacturing data from the US and China. Additionally, July JOLTS job openings in the US dropped by 237k to a three-and-a-half-year low of 7.7 million, missing expectations of 8.1 million, cementing further bearish sentiments. OPEC faces a dilemma of optimising between price support and market share. Delaying the Q4 OPEC output hike may not be enough to support prices as current production is already high amid feeble demand. Output cuts are essential to support prices, but doing so risks losing market share to non-OPEC producers and shrinking oil revenues. Convincing OPEC members to approve deeper cuts may prove challenging. GAS PRICES REBOUND ON STRONG DEMAND AND SHRINKING STORAGE SURPLUS The US Nat Gas prices have been bearish throughout 2024 due to excess storage resulting from the mild winter last year. Prices tanked 31% from the peak of USD 3.313/MMBtu on 12/Jan this year. Prices recovered between May and June and then slumped again, falling 39% between 11/Jun and 27/Aug, hitting a four-month low. Since 28/Aug, gas prices have rallied with strong demand from power generators who have switched from coal to gas. Source: EIA Modest inventory injections have supported the uptrend, with builds below the five-year average in sixteen of the last seventeen weeks. For the week ending 30/Aug, inventories rose by 13 Bcf, below analyst expectations of 26 Bcf and the five-year average of 51 Bcf, thereby reducing surplus. Storage for the week ending 30/Aug was 10.7% above the five-year average, down from 12.1% the previous week. Source: EIA Rising LNG export flows and the US Department of Energy’s approval of a five-year export license for New Fortress Energy further supports prices. Natgasweather.com forecasts moderate temperature-driven demand for natural gas. This outlook supports steady natural gas demand in the near term. Gas majors such as NASDAQ:APA and NYSE:EQT are forced to reduce volumes for the second half of the year due to above-average gas storage. This could lead to tighter supply during winter as seasonal demand picks up. Steady growth in LNG feed gas deliveries will support the US Nat Gas prices, driven by robust exports from the US to Europe. Europe’s demand for gas peaks during winter. The current macroeconomic and geopolitical backdrop is exerting significant downside risk to US Crude Oil prices. Absent a sharp economic recovery in China and an exogenous geopolitical shock, oil prices will remain under pressure. The US Nat Gas prices remain under pressure from excess supply. Easing storage levels, rising demand from power generators, robust winter-led demand from Europe will serve as tailwinds pushing up prices in the near term. Source: Barchart The US Crude Oil prices are presently trading above it 5-year average price range. Meanwhile, the US Nat Gas prices trade significantly below the five-year average. Source: Barchart The options skew is -3.71 as of 05/Sep for crude oil signalling that puts are more expensive than calls. This reflects expectations of stronger downside price risk. Source: CME Group In sharp contrast, skew for the US Nat Gas options is positive at 6.01 as of 05/Sep suggesting that calls are more expensive than puts. This shows expectations for upside price risk. Source: CME Group HYPOTHETICAL TRADE SETUP Given this backdrop, this paper posits the following hypothetical spread trade comprising a long position in CME Micro Henry Hub Natural Gas Futures (MNGV4) and a short position in CME Micro WTI Crude Oil Futures (MCLV4). To establish a spread trade between MNGV4 and MCLV4 given the current prices, a portfolio manager needs 3 lots of MNGV4 to be matched against 1 lot of MCLV4 to ensure that the notional values are identical. The set up and the pay-off under different scenarios from this spread trade is summarised below. Portfolio managers can better manage downside risks with options. More on that in a future research note. MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme . DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
NYMEX:MNG1!Long
by mintdotfinance
2
Seasonal Strategies: Trading Natural Gas with a Tactical Edge1. Introduction Natural Gas Futures (NG1! and MNG1!) hold a significant place in the energy market, acting as a key barometer for both seasonal and macroeconomic trends. These futures contracts are not just tools for hedging energy prices but also present potentially lucrative opportunities for traders who understand the underlying seasonal patterns that influence their movement. Seasonality is a powerful concept in trading, particularly in commodities like Natural Gas, where demand and supply fluctuations are often tied to predictable seasonal factors. 2. Understanding Seasonality in Natural Gas Seasonality refers to the predictable changes in price and market behavior that occur at specific times of the year. In the context of commodities like Natural Gas, seasonality is particularly significant due to the cyclical nature of energy consumption and production. Factors such as weather patterns, heating demand in winter, cooling demand in summer, and storage levels contribute to the seasonal price movements observed in Natural Gas Futures. For this analysis, daily data from November 14, 1995, to August 30, 2024, has been meticulously examined. By calculating the 21-day moving average (representing a month) and the 63-day moving average (representing a quarter), bullish and bearish crossovers have been identified. 3. Analyzing Bullish and Bearish Crossovers Bullish and bearish crossovers are critical signals in technical analysis, representing points where momentum shifts from one direction to another. In our analysis of Natural Gas Futures, such crossovers provide a clear indication of the monthly and quarterly trends. The data reveals distinct patterns in the frequency and magnitude of bullish and bearish crossovers across different months: Bullish Crossovers: Certain months, particularly March, April, and September, show a high number of bullish crossovers. This suggests that these months are historically strong for upward price movements, offering potential buying opportunities. Bearish Crossovers: On the other hand, months like May, June, October, and November are marked by a higher frequency of bearish crossovers. These periods have historically seen downward price pressure, which could present short-selling opportunities. The below chart further illustrates these patterns, highlighting the months with the most significant bullish and bearish activity. 4. Key Seasonal Patterns in Natural Gas The analysis of Natural Gas Futures reveals distinct seasonal patterns that vary significantly from month to month. By understanding these patterns, traders can strategically plan to time their trades by aligning with the most opportune periods for either bullish or bearish movements. January to February: Mixed Signals Historically showing a balanced number of bullish and bearish crossovers. This suggests that while there are opportunities for both long and short trades, caution is warranted as the market can be unpredictable during this period. March to April: Bullish Momentum We see a shift towards more bullish activity. While there is still some bearish potential, the overall trend favors upward movements. Traders might consider looking for long opportunities during this period. May to June: Bearish Pressure The market shows signs of bearish pressure indicating a potential shift in momentum. July, August and September: Summer Bulls July and August: The bullish trend tends to be back but with a higher degree of volatility which may involve sudden market reversals. September: Showing frequent up-moves with strong percentages. This month offers opportunities for traders to re-enter the market on the long side. October to December: Volatile and Bearish Bearish momentum and strong down-moves opening the door to shorting opportunities. Traders should be especially cautious in December with very high volatility in both directions. These seasonal patterns provide a roadmap for traders, highlighting the months that are historically more favorable for either long or short positions in Natural Gas Futures. 5. September Seasonality Analysis: A Potential Buying Opportunity September has historically been one of the most bullish months for Natural Gas Futures. Despite the common perception that autumn marks a period of declining demand for natural gas as the summer cooling season ends, the data reveals a different story. Current Market Opportunity Current Price: With the continuous contract of Natural Gas Futures (NG1!) currently trading around 2.18, the historical trends suggest that this could be a valid entry point for traders looking to capitalize on a potential price rally. Historical Patterns: September has witnessed some of the most robust bullish activity, with the data showing a clear pattern of price increases. On average, September has seen up-moves of 36.45%, making it a standout month for bullish opportunities. Trade Setup Entry Point: Entering the market around the current price on NG1! of 2.18. Target Price: Based on the historical average up-move of 36.45%, traders could set a target price around 2.98. Stop Loss: To manage risk, a stop loss could be placed 11.28% below the entry price, around 1.93. Probability of Success: Historical data suggests a high probability for this trade where 11 out of 13 trades produced bullish moves. Conservative Approach For traders seeking a more conservative strategy, setting a target at the UFO resistance level of 2.673 (instead of 2.98) offers a more cautious approach. 6. Trading with a Tactical Edge: Risk-Reward Analysis The risk-reward ratio compares the potential profit of a trade to the potential loss. In our September example: Risk: The stop loss is placed 11.28% below the entry price at 1.93, limiting potential downside. Reward: The target is 36.45% above the entry price at approximately 2.98. This setup offers a risk-reward ratio of about 1:3.2, meaning that for every point of risk, the potential reward is 3.20 points. Such a ratio is generally considered favorable in trading, as it allows for a greater margin of error while still maintaining profitability over time. Point Values for Natural Gas Futures When trading Natural Gas futures, it is essential to understand the point value of the contracts. For standard Natural Gas futures (NG), each point of movement in the price is worth $10,000 per contract. This means that a move from 2.18 to 2.98 represents a potential gain of $8,000 per contract with a potential for risk of $2,500 per contract. For Micro Natural Gas futures (MNG), the point value is one-tenth that of the standard contract, with each point of movement worth $1,000 per contract. Therefore, the for same trade plan, the potential for reward and risk per contract would be $800 and $250 respectively. 7. Discipline and Emotional Control Successful risk management also requires discipline and emotional control. It's essential to stick to your trading plan, avoid impulsive decisions, and manage your emotions, especially during periods of market volatility. Fear and greed are the enemies of successful trading, and maintaining a level-headed approach is crucial for long-term success. 8. Conclusion The analysis of seasonality in Natural Gas Futures reveals a rich landscape of trading opportunities, especially when approached with a tactical mindset that incorporates probability and risk-reward analysis. By understanding the historical patterns that have shaped the market over the years, traders can position themselves to capitalize on the most opportune moments, whether the market is poised for a bullish rise or a bearish decline. This September, in particular, presents a compelling case for a potential buying opportunity. Ultimately, successful trading requires more than just identifying patterns—it demands a disciplined approach to risk management, a clear understanding of market dynamics, and the ability to adapt to changing conditions. By integrating these elements into your trading strategy, you can enhance your ability to navigate the complexities of the Natural Gas market and achieve consistent, long-term success. As you apply these insights to your own trading, remember that while historical data provides valuable guidance, it is not a guarantee of future results. Always approach the market with caution, stay informed, and continuously refine your strategy based on the latest information and market conditions. When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
NYMEX:NG1!Education
by traddictiv
2
DOUBLE BOTTOM IN NATURALGASNatural Gas (NATGASUSD) 1 DAY Chart Analysis Bullish Indicators Identified: Bullish breakout above the neckline of a double bottom pattern, previously acting as horizontal resistance. Break of a falling trend line, signaling potential trend reversal. Expanding Demand Zone: The broken structures suggest a new demand zone, increasing the likelihood of a bullish continuation. T arget Level: Watching for price movement towards the 2.10 level. Breakout Confirmation: A strong move above 187.8 will confirm the bullish breakout. Risk Management: make sure to put stoploss Disclaimer: This is a technical analysis based on the provided data and should not be considered financial advice. Trading involves risk, and past performance is not indicative of future results. IF THIS WILL HELP YOU PLEASE LIKE THE POST ❤️
MCX:NATURALGAS1!Long
by Shalvisharma5
3
Natural Gas - Head and Shoulders bottom As we approach September, the natural gas market is beginning to show signs of life after a long, hot summer. Traders are keeping a close eye on the charts, and there are a few key signals that suggest something significant might be brewing. MACD is about to turn green, which is often an early indicator that the bearish trend could be losing steam. This shift is accompanied by a bullish signal line, a pixel away from crossover, hinting that momentum might be swinging back in favor of the bulls. Reverse Head and shoulders pattern is forming, price made higher low confirming support. Price is at bottom of the bigger downward channel and low in the Fibonacci levels. With September around the corner and the cooler months not far ahead, natgas could be positioning itself for a seasonal surge. The technical signals are aligning, and the market might just be getting ready to heat up as we head into the colder part of the year. Keep a close watch—this could be the calm before the storm.
NYMEX:NG1!Long
by Diamond-hunter
NATGAS Will Collapse! SELL! My dear friends, NATGAS looks like it will make a good move, and here are the details: The market is trading on 2.146 pivot level. Bias - Bearish Technical Indicators: Supper Trend generates a clearshort signal while Pivot Point HL is currently determining the overall Bearish trend of the market. Goal - 2.082 Recommended Stop Loss - 2.181 About Used Indicators: Pivot points are a great way to identify areas of support and resistance, but they work best when combined with other kinds of technical analysis ——————————— WISH YOU ALL LUCK
NYMEX:NG1!Short
by AnabelSignals
1
NATURAL GAS has bottomed. Excellent buy opportunity.Natural Gas (NG1!) has been trading within a Triangle pattern since the January 09 2024 High, so practically throughout the whole year and this week rebounded exactly on its Higher Lows trend-line, forming a technical bottom. The buy signal gets even stronger as not only has the 1D RSI been on a Bullish Divergence this time (Higher Lows against the price's Lower Lows) but also the 1D MACD formed a new Bullish Cross. Both indicators are posting similar sequences to the Triangle's previous bottom in Feb-March. As a result, being still below the 1D MA50 (blue trend-line), this is still an excellent early buy opportunity. The previous Bullish Leg peaked marginally above the 0.786 Fibonacci retracement level, so our Target is 2.900 (exactly on the new 0.786 Fib). ------------------------------------------------------------------------------- ** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! This is best way to keep it relevant, support us, keep the content here free and allow the idea to reach as many people as possible. ** ------------------------------------------------------------------------------- 💸💸💸💸💸💸 👇 👇 👇 👇 👇 👇
NYMEX:NG1!Long
by TradingShot
NATGAS What Next? BUY! My dear friends, My technical analysis for NATGAS is below: The market is trading on 2.029 pivot level. Bias - Bullish Technical Indicators: Both Super Trend & Pivot HL indicate a highly probable Bullish continuation. Target - 2.097 Recommended Stop Loss - 1.984 About Used Indicators: A pivot point is a technical analysis indicator, or calculations, used to determine the overall trend of the market over different time frames. ——————————— WISH YOU ALL LUCK
NYMEX:NG1!Long
by AnabelSignals
1
Camarilla Pivots: A Guide to Mastering Reversals and BreakoutsIntroduction to Camarilla Pivot Points Before delving into the personal challenges I've encountered with Camarilla Pivots, and the often stark contrast between theoretical strategies and real-world trading outcomes, it's crucial to lay a foundational understanding of the Camarilla Pivot Points. This will set the stage for discussing the adjustments and solutions I implemented to navigate these challenges effectively. Understanding the Core Layers of Camarilla Pivots: S3 and R3 Camarilla Pivots are structured around multiple layers of support (S) and resistance (R), with the third layer (S3 and R3) playing a pivotal role. Unlike the first two layers, which often see less action, S3 and R3 are key zones where momentum frequently stalls. These levels are battlegrounds for "Responsive Traders" who aim to reverse the price direction based on perceived fair values. Trading at R3: Recognized as a prime selling opportunity, traders should aim for S3 as a profit target with a stop loss set just above at R4. Trading at S3: This level is seen as a buying zone, with objectives set towards R3 and a stop loss placed below at S4. Advanced Layers: S4 and R4 (Reversal/Breakout Points) Reversal Scenario: S4 and R4 act as the last line of defense for pivot support or resistance. If the price fails to reverse at S3 or R3, it may continue to these outer layers, which then serve as optimal entry points for reversals due to their potentially lower risk and high strategic value. Breakout Scenario: In instances where the price fails to reverse at R4 and instead pushes above, R4 transforms from a resistance to a support level. This shift marks a critical entry point for traders anticipating further upward momentum, positioning R4 as a new buying zone. The Role of S5 and R5 (Profit-Taking Layers) Although not traditionally part of the Camarilla framework, S5 and R5 are frequently used by traders to exit positions, particularly after successful breakouts from S4 or R4. These levels act as final targets for taking profits, capturing gains from momentum-driven market moves. Practical Trading Tips: It's often wise to avoid trading within the narrow bands between S3 and S4 or R3 and R4, as these zones typically represent accumulation or distribution phases. Decisions in these areas are fraught with uncertainty, as the market has yet to indicate a clear dominance by either buyers or sellers. Conclusion and Upcoming Insights As we progress, I will explore deeper into the nuances of applying Camarilla Pivots in trading, focusing on how to adapt and thrive amidst the unpredictability of the markets. Stay tuned for more insights that will help refine your trading strategies and enhance market performance using Camarilla Pivots.
NYMEX:NGV2024Education
by msrozba
2
Mastering Market Dynamics with Camarilla Pivot PointsIntroduction to Camarilla Pivot Points: A Game-Changing Indicator Camarilla Pivot Points stand out as one of the most effective leading indicators in the realm of technical analysis. Franklin O. Ochoa's "Secrets of a Pivot Boss" offers a profound exploration of this method, widely used for identifying pivotal support and resistance levels in the financial markets. The book is acclaimed for its clear exposition of complex concepts and actionable strategies that cater to both novice and experienced traders, aiming to refine their market strategies across various conditions. Deep Dive into Camarilla Pivot Points Ochoa positions Camarilla Pivot Points as indispensable tools for intraday trading, delineating crucial levels that include S3, S4, R3, R4, and the extended targets of S5 and R5. These points are not merely theoretical constructs but are practical tools for navigating the ebb and flow of market dynamics. Support Levels (S3, S4): These levels are crucial when prices are falling, suggesting potential zones for buying. A rebound from S4, especially, is highlighted as a prime entry point, suggesting a robust setup with tightly managed risk controls. Resistance Levels (R3, R4): At these junctures, R3 serves as a preliminary profit target for rising positions, while a breach of R4 could indicate potential for further bullish momentum, making it an ideal spot for breakout strategies. Extended Levels (S5 and R5): Serving as further profit targets, these levels are significant during periods of extraordinary volatility, indicating strong market movements and potential zones for capturing gains before probable market retractions. Strategic Implementation and Challenges The integration of Camarilla Pivot Points with other market indicators and contextual analysis is emphasized to enhance the validity of trading signals. This holistic approach ensures that traders are not solely reliant on one method but are equipped to make informed decisions based on a comprehensive market view. However, the practical application of these strategies, as vividly recounted from personal experiences during the Covid-19 pandemic in 2020, reveals challenges. Despite meticulous adherence to Ochoa's outlined strategies, the expected outcomes were not always realized, with an 80% incidence of being stopped out of trades. This discrepancy highlights a crucial aspect of trading: the unpredictable nature of markets and the necessity for continuous adaptation and learning. Conclusion: Looking Forward The journey with Camarilla Pivot Points underscores a critical lesson in trading: the importance of flexibility and ongoing education in strategy application. As we prepare to delve deeper into what might have been missing in the initial application and how to adjust strategies accordingly, traders are reminded of the impermanence of market conditions and the need for perpetual skill enhancement. Stay tuned for the next installment, where we explore these adaptations and continue our journey towards mastering the art of trading with Camarilla pivot points.
NYMEX:NGV2024Education
by msrozba
Identifying Profit Points and Key Short Opportunities for NGNatural Gas has exhibited a bearish trend beginning on June 12, 2024, with prices opening at $3.200 per contract. Throughout July, the market saw significant profit-taking activities, with trading prices oscillating between $2.120 and $2.000 per contract. This price range was perceived as a strategic buying opportunity, particularly at the L3 pivot point level during August 2024. Subsequently, prices encountered resistance at the R3 level, stabilizing at $2.320 for an extended period of ten days. This stagnation is likely attributed to institutional traders initiating short positions at this critical juncture, influencing the price dynamics. Further analysis of the quarterly chart reveals a notable rejection at the L4 level; however, it is crucial to note that prices remain above this threshold. Should prices decline below the pivotal level of $2.250 per contract, a bearish stance is advisable, with potential targets set at the monthly L4 of $1.840 and the quarterly L5 of $1.820. This analysis underscores the importance of vigilant monitoring of key resistance and support levels in the Natural Gas market to capitalize on potential trading opportunities.
NYMEX:NGV2024Short
by msrozba
4