Is Natural Gas Potentially Bottoming?
I am taking a look at the technical picture for Natural Gas. I have no real life positions in Natgas in my short term account and as of right now I am only looking at trending information. So just a weekly chart below (I like looking at weekly charts for trending purposes, and if I am interested in getting in or out of a position I like to examine the daily charts).
What interests me about this chart:
The RSI and Stochastics both read oversold (but not as extreme as oil was when it hit $35/bbl), the MACD just sported a positive cross and has a bottoming pattern to it. But the thing that is most interesting is the large spike in price last week, and the fact that the price bounced off the same bottom as the previous weeks price.
So I wanted to see if there is some historical support here. And there is. I looked back at a 10 year chart and Natural Gas spent most of 2002 at or below 4.00 $/MMBtu and spent most of 2003 at or above 4.00 $/MMBtu (Resistance turned into Support). This area between $3.75 and $4.25 looks like it is a major support.
Given all of that, I believe Natural Gas is in a bottoming stance.
If you look back at my Caps picks, I picked Natural Gas to bottom (via UNG) at the end of December (I did not put any money in real life). I was faked out by that small plateau made in December. However the price seems to be converging again, but this time off of some major historical support.
I am not buying in real life yet, but I am definitely watching.
--- Now for a little Fundamental Analysis (or lack thereof).---
I am not as familiar with the Natural Gas industry as I am with the Crude Oil industry. I am not familiar enough with the demand/supply situation to know if there are statistics that complement this technical picture. I have not looked at the supply stats for Henry Hub, nor have I been watching open interest for Natgas.
If anyone who is in the know and has been following the Natural Gas Industry, I would love some input! I would be very interested in someone adding some industry insight to this technical discussion. Thanks!
As always I would love to hear your comments!
The binv standard disclaimer: This in no way constitutes investing advice. All of these opinions are my own and I am simply sharing them. I am not trying to convince anybody to do anything with their money. I am simply offering up ideas for the sake of discussion. As always, everybody is expected to do their own due diligence and to ulimately be comfortable with their own investing decisions.