Tuesday, September 27, 2016

What to expect next in Energy Commodities like Natural Gas?

Understanding long term structure of Natural Gas with the application of Elliott wave, Channels, Moving average and RSI.

It is not only precious metals which have shown sharp rally in the year of 2016 but along with this energy commodities have also shown relief rally. 

The movement witnessed since start of 2016 again reflects that how majority can be at wrong side when trend is due to reverse. In the month of February 2016 WTI Crude was trading at $26.06 and post that it sharply recovered towards $51 level. The gain of more than 100% when majority was expecting Crude to move lower towards $10 level. The same is the case with MCX Natural Gas which has rallied from the low of 110 to 202 level in last few months. So what it suggests for Energy Commodities from medium term perspective? Understanding the trend of any asset class is important with objective technical tools, so that one can prepare himself for the next trend. Below research we have taken from “The Commodity Waves Short Term Update” dated 20th September 2016 on MCX Natural Gas.             

MCX Natural Gas weekly chart:           

(Part of research taken from “The Commodity Waves Short Term Update” dated 20th September 2016)

Wave Analysis:

“Post the underperformance of last few years, in the current year of 2016 finally some relief sign was witnessed in Energy space. Crude has shown recovery from the low of 1800 and as of now moving in consolidation whereas Natural Gas bounced back from the important support of 110 and sharply moved higher towards 202 level in last few months. This is suggesting that underperformance is complete and in next few months we can witness uptick in this commodity. Let us understand the long term chart of Natural Gas.

The weekly chart indicates that in the year of 2008 in which Financial Crisis began prices made important top at 600 level and since then correction is ongoing. This correction is forming complex correction pattern (W-X-Y-X-Z). Recent bounce back is witnessed from the zone which was seen in 2009. It is interesting to see that ignoring the news or events prices respected the support area and sharply bounced back.

Prices have retraced the last leg of down move in faster time. This is indicating that intermediate wave Y has completed at the low of 110 and recent rise can be in form of intermediate wave X of complex correction pattern. Price action from medium term perspective will provide further clues for the same. 20 weeks Exponential moving average which acted as resistance in 2015 is now providing support. This is as per polarity rule of reversal. Post the sharp rise some consolidation is ongoing from last few weeks and post the same prices should move higher towards 250-260 zone where blue parallel channel is placed.

(60 mins chart is removed purposely which is shown in original research report)

As shown in 60 mins chart, the rise from 110 to 202 is impulsive in nature which completed minor wave (a) and post that minor wave (b) is ongoing. This wave (b) is intact in red downward moving channel and as of now prices are trading at the resistance of the same. We require move above 205 followed by 208 to confirm that next leg on upside has started. Unless that happens sideways to negative action can continue.

In short, 205 and 196 is the short term range for Natural Gas. Break of either of these levels will start short term trend in that direction. From medium term perspective, 170 is the crucial support.”

“The Commodity Waves Short Term Update” includes daily research on Gold, Silver, Crude and Copper and Lead, Zinc, Natural Gas on alternate weekly basis with Elliott wave counts. For Subscription Contact Us

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