Hello, this is Itai Levitan at ForexLive.com. Today, I’m diving into Natural Gas Futures (NG), which are trading around 2.92 as of yesterday’s close. This analysis will be relevant to those of you looking at CFDs, futures themselves, or stocks related to natural gas. Here’s a detailed view of my approach:
Natural Gas Futures Overview
Currently, we’re seeing Natural Gas Futures in a significant channel on the weekly time frame. There’s potential for a bullish breakout from a large bull flag formation, highlighted by the recent piercing through the upper edge of this channel. However, we’re still in uncertain territory—it’s possible the price may reverse back down, retesting the flag before making any decisive move.
Dip Buying Extreme Targeting
I’m looking closely at the potential for an extreme dip buying opportunity in natural gas. When I say “extreme dip buying,” I’m talking about setting up a longer-term, strategic plan that goes beyond typical levels. Instead of just waiting for an undefined “deep drop,” I’m identifying specific price levels that could offer remarkable buying opportunities if the market hits them.
Long-Term Support Levels to Watch
Here’s what I’m focusing on for a deeper dip buy:
- 1.612 (Low of 2016) – This level may present an attractive medium-term long position, suitable for swing trades.
- 1.44 (Low of 2020) – Similar to 1.612, this level could offer a profitable swing opportunity, though not necessarily for a prolonged hold.
While these are appealing points for shorter-term trades, I recommend partial profit-taking here to mitigate risk if the price reverses sharply.
Generational Low Opportunity at 1.25
For the patient, long-term investors, my primary area of interest lies around 1.25—the historic low from 1995, nearly 30 years ago. This level represents a “generational low,” providing a triple layer of support:
- The lower bound of the channel.
- The major, longer-term channel trendline.
- The historic 1.25 support level from 1995.
If natural gas reaches this area, it could be a highly attractive long-term buy. I suggest setting several buy orders around 1.25 to capture a position here and holding for substantial potential upside. Patience will be key—having some trading capital reserved for this area could be a game-changing strategy.
Natural gas weekly chart, where we would buy an extreme dip
The Ultimate Extreme at 1.04
If something drastic occurs and the price reaches 1.04, the all-time low from the 1990s, it would represent a multi-generational low. This level would likely attract significant buying interest from funds, institutions, and individual investors. Similar to the parity level we saw with EUR/USD, this psychological round number could spur major accumulation and serve as an unparalleled buying opportunity.
Summary and Final Thoughts on Natural Gas and Exteme Dip Buying
In summary:
- Stay Patient: This strategy involves waiting for rare, extreme dip-buying levels.
- Allocate Capital Strategically: Save some ammunition for these lower levels, where the upside potential is considerable.
- Monitor Support Levels Closely: Levels like 1.25 and 1.04 represent deeply discounted entry points that could yield long-term gains.
Follow ForexLive.com for additional insights for investors and traders, and let’s keep an eye on these setups. Extreme opportunities don’t come often, so be prepared and thank me later!