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Natural Gas: The Door to One Side Could Swing Wide Open
How EWI’s Energy Specialty Service uses Elliott wave analysis to provide a clear picture of natural gas's near-term trend
By Nico Isaac
Tue, 21 Aug 2012 16:30:00 ET
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Some might say getting a hold of the often whipsawing price action in natural gas futures is about as easy as catching a greased pig.

"Fundamental" analysis of financial markets takes one approach: Chase after events outside the market -- supply, demand, weather patterns, etc. -- to forecast price trends. This can get pretty ugly as the interpretation of those events varies dramatically. Case in point, the pair of August 21 news items on natural gas below:
 
  • "Natural Gas Rises... the morning after the National Hurricane Center upgraded a tropical formation... on a trajectory that could take it near natural gas production in the Gulf of Mexico. Environmental conditions are expected to be quite favorable for an intensification to occur." (Wall Street Journal) 
-- VERSUS --
 
  • "Natural Gas Turns Lower Amid Concerns over Ample Supply... The tropical formation is not an immediate threat to production. The storm-related strength is kind of a blip given the overall market conditions." (Associated Press) 
Elliott wave analysis takes a different approach: The-sit-patiently-and-wait-for-said-"pig"-to-come-to-you-with-a-number-of-objective-indicators approach. Indicators like the Elliott wave structure, Fibonacci price targets, daily sentiment, and momentum. The result is a much clearer picture of potential near- and long-term trading opportunities.
Here, we need only look into natural gas's 47% rally from its April 2012 low.
 
Back then, gas prices were circling the drain of a 10-year low. With a historic supply glut AND production surplus, the "fundamental" picture was grizzly, at best. Wrote one Reuters news source at the time:
 
"At this point there isn't anything new to say about natural gas. Most of the investing world has lost hope that it will recover anytime soon... The overarching theme of the market is still bearish." (Reuters)
 
But, right around the same time, according to EWI's Energy Specialty Service, there was indeed "something new" to say about natural gas: Namely, it was time to turn bullish.
 
On April 20, our Energy Specialty Service analysis of both natural nas futures set the stage for a meaningful rally:
 
"The key point is that the evidence (i.e. oversold technical measures, waning momentum, and extreme bearish sentiment) suggest that the market is ripe for an upward reversal. The market should be in the latter stages of the decline.
 
"...the divergence between price (declining) and momentum (waning) point to... and eventual upward turn in what should be a healthy advance despite the oppressive (and well publicized) fundamental backdrop."
 
Flash ahead to today: Energy Specialty Service's intraday analysis of natural gas at 10:46 AM on August 21 reveals that should natural gas breach a key price level, the "door" to one type of a move would swing open.
 
Don't let the volatile natural gas market slip through your hands. Subscribe to EWI's premier, trader-focused Energy Specialty Service today.

Natural Gas: ­­­­A 47% Rally in 4 Months is Just a Taste of Things to Come -- Be Ready When Opportunity Calls Next

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In April this year, EWI Senior Analyst Steven Craig was one of a few analysts calling for a turn in nat. gas. Here's what he told subscribers on April 20:
 
"... the market [natural gas] is ripe for an upward reversal... should be a healthy advance despite the oppressive (and well publicized) fundamental backdrop."
 
Steven's valuable insight helped subscribers to prepare for an otherwise unexpected rally and one of the year-to-date's best trading opportunities.
 
His timely forecast was made possible because of his expert Elliott wave application and 30-plus years of market experience. And right now, Steven's wave count suggests that there are more fireworks ahead for natural gas (and crude oil).
 
Make sure you're ready for upcoming opportunities in energy. Subscribe to Energy Specialty Service and get Steven Craig's timely and actionable forecasts for energy futures and ETFs.
 
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Tags: Elliott wave, Elliott Wave trading, fundamental analysis, natural gas
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