Whenever natural gas trades at lower levels after a big tumble, doubts start hovering all around about the reversal possibilities. Traders have lost confidence in creating a fresh buy position, even when they have intuition of an up-move.
Sometimes after facing big losses or a nightmare trapping, some facts are responsible for their pessimistic attitudes. Reason is only one and that is what most of the natural gas traders have faced many times in past few days. But the need of the hour is to come out of past psychosis and have a look at the following movement of natural gas futures price in the daily chart before creating any position.
I expect that every rise from this level will face profit booking at every upward move, but the swing may be too strong to prove every calculation on the wrong side. I will not advise to create any short at current level in expectation of further fall or after a short time profit booking after any bounce. Some may term a bounce as “A Dead Cat Bounce”, but be careful, because sudden change in weather updates are always a definite possibility this season.
Have a look at the movement of natural gas futures price, on January 10th, 2017 in weekly, daily, 5 hour and 1 hour charts and trade. But don’t forget Stop Loss Order formula.
Have a nice trading time.
Disclaimer: This analysis is purely based on the technical observations. I do not have any position in natural gas. One can create position in natural gas at his/her own risk.