NATURAL GAS (NYMEX:NGJ14)
Natural Gas continues to steal the spotlight as price action continues to validate technical levels on the chart. The most significnat technical pivot heading into today’s session appears the be around 4335. After a relatively weak showing throughout the day yesterday, price did to find a bit of support around the 4380 and 4335 pivots on the chart. Ideally, price should stay contained below the 3400 level and continue to probe lower. The 4335 support pivot could serve as a “trigger point”, which if broken, could intrduce additional selling pressure into the market and quickly take prices down to the 4265 pivot. Both the intermediate term trend as well as near term momentum are pointing toward lower prices and selling rallies into resistnace looks to be the safest play in the natural gas market. Until price can rally back above the 4540 pivot on the chart, the intermediate directional bias will remain to the short side in natural gas.
Apr. ’14 Natural Gas 30-minute Bar Chart. Source: eSignal
After multiple days of relatively quiet price action, the stocks took a hit yesterday after, what seemed to be, relatively positive economic data reports in Jobless Claims and Retail Sales. The positive reports were not enough to sustain record-high prices in the indices and shortly after the brief rally following the number, the US indices began their decent. The Dow fell over 300 points before eventually finding support around the 16094 pivot. Price has since retested this level and held in the early morning session, which could present a valid long entry pivot for those still confident in US stocks. The two main technical levels of significance heading into today’s session seems to be the previously mentioned 16094 support pivot, as well as the 16048 level. In the event that the current correction continues lower, a breakdown below 16048 could confirm a bearish outlook in near-term momentum. Also important to note, the 15948–15978 support band has provided structure to the market on multiple occasions over the past few weeks and could come into play if this corrective pullback persists into next week. For those looking for resumption of the underlying bull trend, the 16180 is a solid initial upside target from here and the 16247 level represents a 50% retracement of yesterday’s big move. It is not uncommon for markets to “bounce” up to a Fibonacci retracement level after a big move like this, so keep these Fibo retracement pivots in mind when assessing long profit targets.
Mar. ’14 E-mini Dow 30-minute Bar Chart. Source: eSignal
May 14 sugar has spent some time digesting between the 1730-1847 area on the chart and the recent pullback in sugar could present a valid risk/reward entry level for traders looking to play the long side of sugar. Technically, the 1730–1745 support band appears to be the most relevant technical level for this market heading into today’s session. With an intermediate term trendline intersection the market around the 1730 level as well, this 1730 support now takes on added significance. Buying dips into this level seems to be a valid opportunity anticipating a bounce of support and a resumption of the underlying bull trend. If the market does produce a confirmed break below the 1730 support pivot, it may be advisable for traders to take a step back and reassess this market. Below this support pivot, the market could dip as low as 1670-1675 before encountering significant support. All things considered, the market has not made any significant lower lows to warrant a trend change and the recent corrective pullback into support could offer a high probability entry signal for traders.
May ’14 Sugar 30-minute Bar Chart. Source: eSignal