Crude oil and unleaded gas exploded to the upside today as we thought, but can Natural gas follow? Not only can it follow it has massive upside potential in its own right! Lets examine why and how you could get in on this exciting opportunity. We have been bullish of this contract for some time and entered a while ago, below the breakout point but where do new traders get into the action? Look for support and strength While prices are finding support and have double bottomed at the mid point of the Bollinger band, short term momentum has NOT turned to the upside. The key here if you are not long, is to look for the stochastic indicator to cross with bullish divergence and enter on strength. The long term picture Gas has massive long term potential (there covered in our previous articles) but here is a quick round up of the major reasons: 1.Crude oil is expensive and subject to geo political concerns, natural gas is not and is produced domestically. 2.High prices of crude are seeing users change to gas. 3.Gas demand is exceeding long term supply, as old fields run out and new fields are not able to pick up the slack. 4.The hurricane season is forecast to be one of the most active of recent years and could drop in demand from rigs. 5.Summers are getting hotter and increasing demand. Traders are focusing on these future trends and starting to buy gas, take a look at the charts and see how cheap gas is in historical terms. With crude oil prices firm, the solution is a switch to gas and this increasing demand and speculative interest could drive prices to far higher levels. Timing the trade. We have had a correction after the recent breakout and prices are finding support and could go higher. Keep an eye on short term momentum to enter the long side, dont jump too early wait for confirmation. Caution Natural gas is extremely volatile and needs to be traded with caution. Options are the preferred method in that they give unlimited profits linked to limited risk.Buy at or in the money options with plenty of time to expiry to ride out any short term volatility. A major bull market is forming dont be left out! If you have not looked at the potential for natural gas, check it out. This contract could post huge gains and for savvy traders that means big profits. |
