Nat Gas is Poised for a Move

Natural Gas has traded within a very narrow 4-day range that could forecast the next major breakout opportunity in this commodity. Here’s the setup and targets to watch..

Buy Signal

The daily chart of Natural Gas shows price has traded higher since the June bottom and is currently enduring a pull-back that could lead to the next key buying opportunity.

As a matter of fact, two consecutive buy signals have fired from the PEMA Pull-Back system, which looks to take advantage of “buy the dip” opportunities during trending phases.

Not coincidentally, this system fired highly successful sell signals in this commodity throughout its major downtrend, which began in early 2011.

Narrow Range Breakout

A pattern of particular interest is the 4-day narrow range that has developed, which could spark the next major breakout in Nat Gas. Over the last four days, Nat Gas has logged a range of just .194 points, which is far less than it’s average 4-day range of .361.

This type of range compression tends to act like a coiled spring that’s ready to explode. Should a breakout occur, we could see a very nice phase of expansion in the upcoming four days.

Interestingly, Nat Gas has also formed an Inside Day pattern, whereby the current day’s range fell completely inside the prior day’s trading range. This pattern alone can signal a major breakout move, so keep an eye on Nat Gas in the days ahead.

The Game Plan

Since two highly reliable buy signals have fired recently, I’ll be expecting an upside break from the current 4-day range. If the 2-day high of $2.995 is taken out, look for price to get a very nice push toward the 4-day range adjusted target of $3.179, and even as high as $3.207.

However, if price cannot rise above $3.00, look for a potential downside push toward the bearish 4-day range adjusted target of $2.694, with a shot at $2.665. Watch the 2-day low of $2.882 for signs of early weakness.

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Let’s see how this Nat Gas play works out!

Cheers!

Frank Ochoa
PivotBoss | Own the Market

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