Currently, price is rounding once again (more gradually than the '06 - '08 selloff as well).
While it may not have "bottomed" at this point this rounding behavior is at least displaying a slowing pace. There's also the added interest that price has completed a 50% extension of it's original momentum move.
This channel is displaying the rounding of price taking place:
It will be interesting (perhaps telling) to see how price responds to the most immediate resistance level overhead within this channel:
While on the daily, price is building another inverted roof type pattern. This could turn out to do a few things; it can break out from here and attempt a measured move, it can retrace lower to form a Right Shoulder, it can retrace up to 100% and make a double bottom, or even continue lower beyond the most recent swing low
There may have been similar inverted roof structures previously, but at least the most recent one has had constructive higher lows, unlike the previous moves that have been fast without building much value.
It appears that the Reward:Risk is shifting in favor of buyers down here, so I'm keeping watch for bottoming patterns with volume.
4 comments:
Be wary of UNG. It has not tracked NG very well. It has the problem of "contango." I bought some shares a year ago thinking it would track natural gas and I was sorely disappointed. Only in the last month have I managed to turn this into a profit. UNL has not done much better. FCG tracks nicely but the volume is low. So I haven't really found a good trading vehicle for NG yet.
Thank you for the input Tom, much appreciated.
HI Todd,
I am just trying to learn, but how did you determine to draw the fib lines lows? Is it becuz it had a double bottoms? Thanks Hector
Hi Hector,
I determined to draw the Fib. lows there b/c it was the lowest point before a large correction (a sign of counter momentum due to short covering and/or long entry combination which likely took its cue off of the double bottom).
Starting with the highs we bring the Fib.s down to most recent lows. After each low was made the '08 rally was the only counter-trend rally to reach anywhere near a 38.2% retracement.
So, I'm looking to measure momentum legs and the chart can tell you when one momentum leg ends and another begins.
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