MCX Natural Gas: Is Upside Correction Ended?

Natural Gas is one of the volatile commodities in the futures market. In April 2013, we observed a sharp fall in bullions and base metals as well. But Natural Gas continued the corrective move on upside, and tested the crucial levels. This indicates the independent movement of Natural Gas.

Many traders find it difficult to trade this energy base due to fast movement. Technical analysis works on this commodity very well. Advanced technical analysis such as the Elliott wave theory is shown below in the weekly chart picked up from the commodity research report “The Commodity Waves”.

Natural Gas Weekly continuous chart:


Waves Analysis: In April 5, 2013, we mentioned that in the start of January 2013, prices managed to move within the blue channel and bounced back from the strong support of 170 levels on upside. This suggests the end of minor wave x near 170 and started the next leg on upside in the form of minor wave z of primary wave Z. As long as 190 is protected on downside our favored view positive over short term and prices can move higher towards the next resistance of 240 levels.

Natural Gas moved precisely as expected. Prices sustained above the strong support of 190 and made an exact high of 240. Prices the failed to cross the resistance of 240, and turned lower.

Momentum indicator RSI and Price ROC exhibits the strong negative divergence shown above in weekly and daily chart respectively. as per wave theory, prices might have ended intermediate wave z of complex corrective pattern (w-x-y-x-z) of primary wave X, and it can start the next leg on downside in the form of wave Z. Price confirmation will be obtained below 190 over the medium term.

From a medium term perspective, 240 will act as a strong resistance. Elliott wave counts works brilliantly in this commodity. Momentum oscillators and channeling technique is in sync with Elliott wave counts. This indicates the topping formation, and eventually it should start next leg on downside.

In short, as long as 240 is intact on upside our bias is negative and prices can move lower towards the next support of 190. Further, a move below 190 will accelerate the selling pressure and prices can move until 170/165.