Technicals | Jul 26 2012
Bottom Line 26/07/12
EW Trend: Impulsive (?)
Price Trend: Up
Trade Strength: Strong
Technical Analysis 25/07/12
LAYMAN'S:
Price is continuing to prove itself here as the run higher looks set to continue. The push up off the mid June lows has in fact had little in the way of a pull back to this point and is continuing to look quite strong. And the higher it goes the more likely the lows at 2.09 will be forwarded as being major, and therefore a significant turning point in a trend that has been relentlessly down on a multi year basis. It has certainly been a long time coming. And even though price is going to have to prove itself robust for longer than the three months it has done thus far, the early signs are looking very promising. A break above 3.30 is what is now required, and then a continuation through to 3.50. And this is just for starters.
TECHNICAL:
Nice bullish 'W' formation off the major support zone is continuing to find buyers. Wave equality at 3.00 been attained and now exceeded with the next port of call required to keep the bullish motive on track being 3.48, which is the 1.618 x W1 extension target. If this level can be attained with little in the way of pullbacks, then the chances of a 5-wave impulsive outcome off the major 2.09 lows becomes very real. Normally we would see some hesitation come in around the Wave-4 highs of a lesser degree which were in the 3.17 – 3.30 price zone. Our last closing price was 3.18 so with this in mind, we are certainly in the zone where sellers have surfaced in the past. Thus the reason why a push above 3.30 would be a sign of strength here. And if this is a Wave-3 to the upside unfolding, the impulsive nature of such a move should really dictate that 3.30 is broken through relatively easily. With the next target 3.48 well in sight post this.
The only concern right here and now is the slight lower category bearish divergence that is presently lingering . It has yet to trigger, is minor, yet something to be aware of all the same. Not overly strong in my books so it could just as easily be ignored as well. And the other slight negative is the lack of fuel in the way of volume that has been present over the last week and half or so. Very subdued indeed yet it could also imply that sellers have simply backed away having exhausted themselves. If this is the case, the push higher into our target zone should be relatively smooth sailing. Certainly overbought on the daily and weekly charts, be it the monthly has yet to warm up, remaining well oversold. Not surprising at all considering the very early stage of this upside move. Price still has a lot to prove here. Yet the bullish argument continues to stick, so no complaints.
Trading Strategy 25/07/12
We are long natural gas at 2.71 with stops presently below 2.49. I'd be happy to raise the stop now to just under 2.71 for pretty much a break even trade. A recent minor dip was recently supported at this level so we will continue to look for price to be in demand above here moving forward. Continuing to like what I see . Even more so if divergence can be ignored shorter term and price succeeds in attaining 3.50 or even a little higher, before any shallow resting phase within a Wave-4 looks to take hold. With a bit of luck we will be looking to remain in this trade for a lot longer just yet. Bullish.
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