Natural Gas/DGAZ/UGAZ

Please note that all updates posted here are NOT real time and have a time-lag UP TO few hours to days depending on the bandwidth available with us to post here and on twitter. The updates are meant for information only. For the purpose of trading, real time updates are critical and mandatory. 

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Original post - 12th Nov 2019 

Posted here - 20th Nov 2019

[Natural Gas December Futures Update] 

Long range [15-25 day outlook], released earlier today, shows bearish pattern spilling over to early Dec. 

Short range [1-15 day outlook] models are slowly stepping into the time window of previous long range models which were projecting the bullish outlook to fade away & bearish pattern taking hold towards the end of November.

As anticipated in earlier updates, the pricing-in of the bearishness for the end of Nov is currently underway. The pricing-in process is never linear. There shall always be brief bounces owing to knee jerk reaction to a short range report or technicals. That dosen't mean that the trend has changed. Both weather models & technicals shall provide clear signals when a trend change happens.

Overall, the long range bearishness in early Dec has the potential to put some more downward pressure on the prices from here. The key support zone at 2.575 followed by 2.519-2.512 may be tested. 

Two new layers of key resistances have now formed at 2.756 & 2.887 below the MAJOR key resistance at 2.932-2.942.

From a trading perspective, we were constantly encouraging positional traders [from last many weeks] to book partial profits on their existing positions on account of this anticipated correction. 


Bulls should opt for a 'wait & watch' approach until weather models show some confirmed signs of a turn. Once the weather provides confirmation of continued bullishness, long positions may be scaled optimally.

Original post - 6th Nov 2019 

Posted here - 8th Nov 2019

[Natural Gas December Futures Update] 

NG has set up a base camp adjacent to the next mountain which is the MAJOR key resistance at 2.932-2.942. It is meandering around it waiting for more direction from weather models to decide whether to climb it or to retreat for now & attempt it some other time in winter. To test & cross this barrier, it shall need strong backing from the weather models - both short range[1-15 day outlook] & long range[15-25 day outlook]. 

The short range has been cooperative & collaborative. It is the short range bullishness that has pushed the price from 2.4 zone all the way to 2.9 with two subsequent weekend gap up openings & multiple short squeezes. 

On the other hand, the long range has been a NO SHOW so far. The long range is showing bullish outlook fading away & bearish pattern taking hold closer to the last week of November. The next long range shall be released on Friday. What bulls need is a continuation of the bullish pattern in December. 

2.765-2.723 is a critical key support zone that shall need to hold for the IMMEDIATE CONTINUATION of this bullish pattern. 

From a trading perspective, we remain in Phase 1 of the winter guidelines.

 

Intraday trading in NG often triggers emotions leading to over trading & revenge trading & hence best avoided. Majority of the professional NG traders around the world operate prudently on a swing/positional basis.

It is literally true that millions come easier to a trader after he knows how to trade, than hundreds did in the days of his ignorance - Jesse Livermore

Original post - 5th Nov 2019 

Posted here - 8th Nov 2019

[Natural Gas December Futures Update] 

Long range models indicate that bullish outlook is fading away & bearish pattern is beginning to take shape towards the end of November.

The short range, while bullish for the next 7-8 days, shall start approaching this long range window [last 2 weeks of Nov] in the next few days. Bearish weather shall result in potential losses in HDDs which shall start getting priced-in the current price.

The next couple of long range releases on Friday & next Tuesday shall provide insights on weather forecasts for December. The real question is whether this end of November bearish pattern shall extend & spill over into December.

Technically, Major key resistance remains at 2.934-2.942 which needs to be taken out for any further bullish traction. Also, note that 2.765-2.723 is a critical key support zone that shall need to hold for the IMMEDIATE CONTINUATION of this bullish pattern. 

Traders who are positional long from many weeks should continuously manage positions vigilantly to ensure that substantial gains are always protected by moving stop losses or by booking gains on partial positions which may then be reloaded on any dips near key levels. Such optimized trading strategy accumulates sizable gains by the end of the winter cycle.

Original post - 5th Nov 2019 

Posted here - 8th Nov 2019

[Natural Gas December Futures Update] A few hours before market open today, we had shared that the short range weather models over the weekend were bullish. Clearly, the gap up of 2.5% & further extension to 4% now is reflective of the significant addition of HDDs in the weekend models. 

The next long range is expected to be released in 24 hours and that shall provide more visibility for end Nov/early Dec. 

From a technical perspective, the MAJOR key resistance at 2.934-2.942. Bulls need to see a break of this major key resistance for a move into the 3+ zones.

From a trading perspective, we remain in Phase 1 of the winter guidelines where shorts should be completely avoided.

A trader with a positional outlook [4-8 weeks] should not be affected by every long range & short range release. That said, it is always prudent to book some gains on partial positions at every large move & reload these partial positions back on dips near key levels. Such optimized trading strategy accumulates sizable gains by the end of the winter cycle.

Original post - 3rd Nov 2019 

Posted here - 8th Nov 2019

[Natural Gas Weekend Weather Model Update]

 
Short range weather models over the weekend remain bullish. 
High possibility of a GAP UP at open.

Original post - 30th Oct  2019 

Posted here - 02 Nov 2019

 

[Natural Gas December Futures Update] Fundamentally, on the weather models, Short range models remain bullish in the immediate term with cold intensifying, but the same intense cold is seen to be dying in mid-Nov thru end of Nov which is what is showing in the bearish long range model. While there may be some short term spikes in prices in response to the addition of HDDs [Heating degree days] in the immediate term, NG price shall also have to come to terms with the bearish long range, with each passing day. 

The next long range to be released on Friday shall provide more visibility for the last week of November & early December. If it transitions to bullish, the upward momentum shall continue. On the other hand, if it remains bearish, expect some headwind & correction in NG price.

NG has now entered a region which has a massive population of shorts. So, any bullish weather model release results in a short squeeze phenomenon leading to a sharp rise in prices from one key level to the next. As NG rises, the size & span of this squeeze shall only get bigger. We had referred to this phenomenon as the "Big Short Squeeze" in Phase 1 of the winter guidelines.

Technically, the key resistance is at 2.707 with extension key resistance at 2.723 & 2.765. The key supports are at 2.589 followed by the 2.51-2.521 zone.

From a trading perspective, we remain in Phase 1 of the winter guidelines.

A trader with a positional outlook [4-8 weeks] should not be affected by every long range & short range release. That said, it is always prudent to book some gains on partial positions at every large move & reload these partial positions back on dips near key levels. Such optimized trading strategy accumulates sizable gains by the end of the winter cycle.

Original post - 28th Oct  2019 

Posted here - 02 Nov 2019

[Natural Gas December Futures Update] 
 

On Sunday, we had shared that the weekend short range models are very bullish & that NG shall gap up at market open. As anticipated, NG opened 2.5% higher & has now extended its gains to 5%. 

Original post - 27th Oct  2019 

Posted here - 28th Oct 2019

 

[Natural Gas Weekend Weather Model Update] 


Short range weather models over the weekend  are very bullish. High possibility of a GAP UP at open.

 

Original post - 26th Oct  2019 

Posted here - 28th Oct 2019

[Natural Gas November Futures Update] 

We wanted to wait for the last short range weather release for Friday and also the daily production numbers before sharing today's NG update. Both were released just a few minutes ago.

Long range[15-25 day outlook], released earlier today, still continues to remain bullish. Short range [1-15 day outlook] has been slightly mixed but is still leaning to the bullish side. 

Production numbers have again started to spike above average which is what has been keeping the cap on the prices. 

Weekend production numbers and next week's long range models [forecasting Nov end/early Dec] shall be critical for the bulls.

Technically, a new key support has now formed at 2.265 followed by 2.185.

2.385-2.393 remains the critical key resistance that needs to be taken out for bullish traction.

Some members may already have automatically rolled over Dec contract NG prices reflecting on their trading platform. Dec futures are currently trading near 2.465. Please check with us if this creates any confusion and if you have any questions.

Original post - 22nd Oct  2019 

Posted here - 28th Oct 2019

[Natural Gas November Futures Update] 

Short range weather models released today continue to remain bullish with addition of HDDs. The focus shall now shift to the long range to be released on Friday. The daily production since last 2 days has stabilized to 93-94 bcf/d which is closer to the daily average, after a record production weekend.

No change in technicals from the previous update

Technically, 2.185 followed by 2.156 & 2.135 are all strong key supports. 
2.385-2.393 remains the critical key resistance that needs to be taken out for bullish traction.

Original post - 15th Oct  2019 

Posted here - 28th Oct 2019

[Natural Gas November Futures Update] 

Today is Oct 15th and the gates to Phase 1 [Oct 15 - Nov End] are wide open. Please refer to the WINTER GUIDELINES & absorb them carefully, especially the part on discipline. If you have any questions, please feel free to write to us.

Long range, released earlier today, is starting to turn bullish for the second half of November. Natural Gas needs a continuation of this bullishness in forthcoming models for Dec.

Please note that the term bullish dosen't mean winter is about to begin. That's a no-brainer. Bullishness refers to "colder than normal" weather which means heating degree days [measure of heating] is forecasted to be above the 5 year & 30 year average."

As mentioned in the last update, short term models were already turning bullish. A continuation of the combination of long range & short range bullishness can provide solid support & tailwind for Natural Gas prices into November. 

Technically, 2.385-2.398 is the critical key resistance zone that needs to be taken out for bullish traction. Needless to repeat, shorts should be completely avoided in Phase 1.

Original post - 7th Oct  2019 

Posted here - 28th Oct 2019

 

[Natural Gas November Futures Update] 

Long range, released earlier today, continues to remain bearish. The bearish weather is now expected to continue till around Nov 10th. In other words, warmer than normal weather continues for another 30 days as per long range. At the same time, the 30-45 day long range has begun to show the influx of cold weather for the second half of November.

NG price shall remain under downward pressure for the next 15 days on account of the weather models & may set up a test of the key supports.

From a technical perspective, the key supports remain at 2.215, 2.185 & 2.135. The critical key resistance is at 2.385. 

From a trading perspective, the focus should be on a positional set up to prepare for Phase 1 in line with the WINTER GUIDELINES shared earlier. Shorts should be completely avoided.

Original post - 30th Sep  2019 

Posted here - 28th Oct 2019

[Natural Gas November Futures Update] 

Weekend SHORT range models were bearish. This was not a surprise given that the LONG range weather model, 15-20 days back, had already forecasted "warmer than normal" weather into early October. We had shared in the last few updates that if heat persists into October, then it shall be bearish for early heating demand. 

Another surprise development over the weekend has been the production figures. Production hit about 94 Bcf/day [way above the average of 89 bcf/d]. Fundamentally, these two updates shall maintain downward pressure on the Natural Gas prices in the immediate term. 

A new long range weather model shall be released within the next 24 hours.

Technically, NG is now approaching a zone with critical key supports that are very close to each other at 2.325 followed by 2.29-2.28 zone. The key resistance is now at 2.442 which shall defend any bounces. 

From a trading perspective, as the prices get lower from here, SHORTS should be completely avoided. Remember that we are in a transition from summer models to early winter. Winter weather scenarios have the potential to change overnight. NG price action can be extremely brutal if a trader is caught trading against the larger seasonal trend, especially without stop losses.

From a positional perspective, the next 15 days shall provide ample opportunities and corrective dips to PLAN for Phase 1 covered in the winter guidelines. Kindly operate with a good trading plan and put your best foot forward on planning, patience & discipline.

If you need to bounce off your thoughts, ideas and plans, kindly write to us and we shall brainstorm with you.

Original post - 16th Sep  2019 

Posted here - 28th Oct 2019

[Natural Gas October Futures Update] We are now interpreting long range [15-25 day outlook] weather models for end of September & early Oct. In the next 30-45 days window, weather models shall slowly transition from summer [cooling degree days or CDDs] to winter [heating degree days]. How do the basic interpretation of these two models differ?

In summer, warmer than normal weather is bullish for NG prices. Why?
This is because, warmer weather would mean higher electricity consumption for cooling. When NG prices drop, it starts replacing Coal for the purpose of electricity generation [power burn], thereby increasing NG demand & supporting higher prices.

In winter, cooler than normal weather is bullish for NG prices. This is relatively simpler to understand as NG is used for home heating.

Again, we are in a transition phase from summer models to winter models. The long range models released some time back shows a warmer than normal end of September & early October. 

While warmer than normal weather in September is bullish, as we transition to October, warmer than normal weather is neutral to slightly bearish. In other words, if heat persists into early October, it can be neutral to slightly bearish for Natural gas demand.

Technically, 2.724 is a key resistance. Key support remains at 2.6 followed by 2.529 & 2.447. 

Intraday traders may use these levels as references. From a positional perspective, traders should currently prepare for Phase 1 [Mid-Oct/Nov]. Please refer to the Natural Gas Winter guidelines.

Original post - 30th Aug  2019 

Posted here - 4th Sep 2019

 

[Natural Gas Winter Trading]


From a trading perspective, with about 45 days left for the release of the first winter weather [long range] forecast, buy & accumulate on dips shall be a prudent strategy. Short positions or bottom fishing should be completely avoided. 

Mid/Late October to Early Feb, NG shall offer crazy, volatile moves averaging a range of $0.3-0.5 per day.

Weekend gap open can be as high as 5-10% sometimes. Last year NG recorded a 20% move in a single day in winter.

We shall be sharing 4-5 LIVE weather forecast updates on a DAILY basis during winter.

If there is one instrument that tops the list in proclaiming blowing up & destroying maximum number of healthy trading accounts every year, it is Natural Gas. Every year a number of large hedge funds go bust trading NG casually & carelessly.

If you are a new trader in Natural Gas and have never witnessed its behavior during winter, you have to be extremely careful. Prepare yourself to be amazed & startled.

Original post - 13th August 2019 

Posted here - 15th August 2019

[Natural Gas September Futures Update] Long range weather models remains bullish for the last week of August & early September. Short range still continues to be neutral to slightly bullish.

From a technical point of view, we had anticipated that NG would provide a technical bounce at 2.04 key support, but it shall need supportive weather to cross the key resistance of 2.15-2.155. 

After failing at the 2.15-2.155 key resistance four times in the last 2 weeks, NG has finally managed to break it. NG should slowly grind higher to the 2.25-2.3 region.

Small position, tight SL, 1% rule are a MUST in NG trading. Longs from 2.04 region should move SL to cost.

Original post - 9th August 2019 

Posted here - 15th August 2019

[Natural Gas September Futures Update] Long range weather models with 15-25 day outlook remains bullish. That said, from the 25th day onwards which is ~ Sep 4th, the weather shows a trough pattern developing over Canada, potentially moving south & east to north eastern part of United States which may dissipate bullish weather partially. TOO EARLY TO CALL on the trough pattern, but it is important to follow this closely and *view it as a potential risk.*

Short range weather models have improved and are slowly aligning with long range and are turning neutral to slightly bullish.


Storage report released yesterday was bullish [55B actuals v/s 59B forecast].

From a technical perspective, we had anticipated that 2.04 key support shall hold and provide a technical bounce. This is exactly what happened. We had also mentioned that 2.15 is a key resistance. NG has failed to break 2.15 multiple times.

From a trading point of view, longs from 2.04 key support region should hold their position with SL right below 2.04. A sustained break of 2.15 key resistance has the potential to target the 2.25 zone.

Original post - 2nd August 2019 

Posted here - 4th August 2019

[Natural Gas September Futures Update] Long range weather models, released some time back, continue to show supportive weather for the last week of August and into early September. The short range models, however, remain bearish. So, effectively, there isn't a material change in the weather model situation.
 

Last 2 days of price action is a good example of how a transient short squeeze [panic driven short covering] without any solid foundation from weather data has a very short life. The entire short squeeze was ruined in a matter of minutes after the release of bearish storage data and NG is back to the levels we saw on Monday.

But this also guides us on how ONE SIDED [short side] the market positioning is and provides a sneak peek of a violent move that may come whenever supportive weather returns.

Technically, the next key supports come in at 2.144 followed by 2.106 and 2.043. Key resistance is at 2.31.

From a trading perspective, it is best to wait for 1) Supportive weather 2) Technical bottom, before exploring a long position in NG.

In 2006, Amaranth Advisors, a hedge fund, lost $6 billion in NG trading. Last year, in Nov, when Natural Gas moved from 3.2 to 4.9 in 7 days, trading firm called Optionsellers lost $150 million. 

There are a plethora of other examples. All of them have one thing in common. They all chased tops/bottoms, averaged losses, hedged continuously, traded with hope for better weather & bet significant percentage of trading equity on a single trade.

Waiting patiently for weather model data confirmation and then following the trading discipline [small position, trading near key technical levels, tight SL, 1% rule] is the ONLY SUSTAINABLE WAY to trade and win in Natural Gas.

 

 

Original post - 25th July 2019 

Posted here - 30th July 2019

[Natural Gas August Futures Update] The short range US & European weather models are showing significant divergence from each other, one is bullish & the other is bearish. This is a rare occurrence but does happen a few times every year. Under such circumstances, traders avoid aggressive positioning and wait for more reliable convergence in the models to take fresh positions. As a result, NG prices keeps leaking lower from one key support to another. 

Technically, NG has a key support at 2.22. Below 2.22, 2.16 is the next critical key support and is the line in the sand for the bulls. 

In case 2.16 breaks, NG may target the key support at 2.04.

 

Original post - 10th July 2019 

Posted here - 10th July 2019

 

[Natural Gas August Futures Update] Natural Gas is trading at 2.48 and on the brink of touching the target of 2.5 that we had anticipated in a number of previous updates when NG was trading at 2.16-2.2. While the weather is still bullish and a move higher to 2.6 remains a possibility, from a trading perspective, it is always prudent to lock gains by trailing SL or/and book partial/full gains.
 

Longs from 2.2 region should certainly look to book partial gains here and move SLs to lock substantial gains.

Original post - 9th July 2019 

Posted here - 10th July 2019

 

[Natural Gas August Futures Update]  Long range weather model [15-25 day outlook] for August is bullish. If the daily [short range] weather models do not deviate & stay consistent with the long range, the tailwind on NG prices shall only get stronger. With some more confirmation from daily models, we may revise our price outlook from 2.5 to 2.6-2.7 zone for late July/early August.

Technically, the CRITICAL key support of 2.346. has held overnight which matches with a wave(iv) correction. The next key resistance is now at 2.5.

Important to absorb & reinforce that NG trading should be pursued with small positions and tight stop losses since there is always a potential for rapid change in weather forecasts/models.

 

Original post - 8th July 2019 

Posted here - 10th July 2019

[Natural Gas August Futures Update] No surprises so far in the weekend weather models/forecasts. The model that had turned bullish last week continues to remain bullish. This may have the potential to create another short squeeze to 2.5 or higher region.

Technically, 2.45 key resistance was surpassed in the gap up open earlier today. The next key resistance is now at 2.5.

Longs from 2.2 zones may move their SLs below the CRITICAL key support of 2.346.

Intraday local supports are at 2.41, 2.392 & 2.373.

Important to reinforce that NG trading should be pursued with small positions and tight stop losses since there is always a potential for rapid change in weather forecasts/models.

Original post - 5th July 2019 

Posted here - 5th July 2019

[Natural Gas August Futures Update] We have seen a good short covering rally from 2.27 to 2.44, as anticipated a few hours earlier. From a NG summer trading perspective, the gains are quite good. 

Longs from 2.16 last week and fresh longs from 2.27 should lock gains by moving SLs to 2.35 or book gains

NG now faces the next key resistance at 2.44 - 2.45.

Original post - 5th July 2019 

Posted here - 5th July 2019

[Natural Gas August Futures Update] The weather model forecasts for the last week of July has now turned bullish & if this weather continues to be supportive, NG may see a short covering rally to $2.5.

Needless to say, the long range models which will now begin forecasting August weather shall have to remain continuously supportive for the prices to keep rallying.

Technically, 2.16 is the CRITICAL key support. 2.214 has now formed a higher layer of key support above it. 

 

Local intraday support is at 2.27.

From a trading perspective, small positions & tight SLs are the most important rules that need to be followed for NG trading

 

Original post - 30th May 2019 

Posted here - 3rd June 2019

[Natural Gas Update] Bearish weather forecasts in the 10-15 day range and extremely bearish print on storage yesterday has led to a technical breakdown in NG and the key support of 2.55 has been taken out. NG may now test the next key support region of 2.44.

 

Longs should be avoided until more bullish and supportive weather forecasts return. Our trader's survey indicates that most traders are on the sidelines on Natural Gas.

 

Original post - 10th May 2019 

Posted here - 11th May 2019

 

 

[Natural Gas Update] The early long term weather forecast for June is showing a less bullish outlook. Storage builds may show consistently above 100+ bcf if that remains the case. Markets may remain oversupplied into June and the prices may be capped under $2.65.

In our trade strategy, we had commented that weather shall have to be supportive to continuously add positions. While these are very early days for June forecast, it shall be prudent to book gains on Natural gas position that was initiated last week and move to the sidelines.

Original post - 4th May 2019 

Posted here - 9th May 2019

[NATURAL GAS] [June Futures] 


[Trade Strategy] [SWING/POSITIONAL]

Primary Scenario:- LONG AT 2.55 for TARGETS at 2.7
SL AT 2.472

Key Support:- 2.555, 2.51, 2.483

Comments:- On the fundamentals, power burn and gas demand are beginning to pick up and this should tighten some of the surplus we are seeing in storage numbers.

On the technicals, the price breakdown that occurred in the last week of April has seen a technical consolidation. The traders survey that we conduct every week in the US markets has also seen a beginning of LONG exposure in Natural Gas.

Position Size: Begin with a small position leaving room to add and build on this position down the line if we get supportive weather.

 

 

Original post - 16th April 2019 

Posted here - 5th May 2019

[Natural Gas] [IMPORTANT]  In a few days, we shall enter the summer trading window on Natural gas for the next 6 months. This window introduces the concept of TDD's [Total degree days] in place of HDDs [Heating degree days]. Total refers to the sum of heating & cooling degree days. 

The price movement shall primarily depend on daily weather forecast in comparison to the 10 year & 30 year average along with the daily production numbers. We shall begin sharing them on a daily basis shortly.

In the summer window, NG shall trade in a narrow trading band. The trading strategy shall be to operate in this trading band with LONG positions at the lower end and SHORT at the higher end of the range. We shall trade in this manner multiple times through the 6 month window. 

Having seen NG cycles for so many seasons over the years, the summer window can provide low risk opportunities with excellent returns if this band is identified correctly and trades properly maneuvered through daily weather data & production numbers.

Original post - 15th April 2019 

Posted here - 16th April 2019

 

[Natural Gas Update] The weekend weather has been mixed with weather models leaning towards net bearish. The cold blast anticipated by the long term models last week for the end of April seem to have lowered in intensity over the weekend increasing the risk on LONG trades.

 

 

Original post - 8th April 2019 

Posted here - 8th April 2019

[Natural Gas] Last week, we had recommended LONG in Natural Gas when it was trading around 2.63. While the weather forecasts are switching between bullish & bearish, the risk/reward remains towards LONG since rest of the April is expected to be colder than normal. 

That said, FRESH LONGS are NOT RECOMMENDED. Existing Longs should move their SL to cost or lock some gains.

Keep in mind, the long view was for a short term. As more days go by, we are starting to get closer to warmer weather forecasts in May.

Original post - 27th March 2019 

Posted here - 27th March 2019

 

[Natural Gas] As anticipated, Natural Gas is moving towards the lower targets and is up ~+70 points from the entry point that was shared yesterday. This is sizable considering NG's lethargic moves during this time of the year.  Important to move SL to COST/LOCK some gains.

Original post - 25th March 2019 

Posted here - 26th March 2019

[Natural Gas] Trading Strategy:- The weekend bearish forecast has resulted in a technical breakdown of the key support at 2.752. The gap down to 2.726 was a new short term low and subsequently a small bounce now to ~2.74-2.75 region provides a good entry point for a SWING SHORT trade in Natural Gas. A good SL on this opportunity shall be 2.85. Target shall be around 2.66.