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When Is Gas A Good Thing?

Published 02/07/2014, 03:38 PM
Updated 07/09/2023, 06:31 AM
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As a trader, the answer to that question is when you are positioned on the right side of the market.
Below you will see two charts: Natural gas and Unleaded gasoline. I am looking at a bearish trade ideas in natural gas and bullish ideas in RBOB.

Natural gas
prices spiked on 2/5 trading above $5.70 in March futures but since prices have lost nearly $1 and retraced to their 38.2% Fibonacci level giving up 17.5%. Weather forecasts project warmer weather in the coming weeks which will have the effect of easing demand. It is my opinion that we have passed the worst of the cold weather for the season...maybe that's just my wishful thinking being a Chicago resident.

I anticipate a trade back near $4.25 in the coming weeks.
Natural Gas
RBOB prices are higher by 5% in the last 3 sessions currently trading to their highest levels since
1/3.

Friday marked the first settlement above the 50-day MA in 5 weeks. RBOB appears to be getting support form a rise in ethanol RIN credits as well as reports of a refinery glitch in Port Arthur, TX. There is also a strong seasonal tendency that I have alluded to you in recent weeks of industry buying ahead of the summer gasoline season that also may be having spillover effects.

I am operating under the influence that an interim bottom has been established and futures will appreciate in the coming weeks. I suggest using the red horizontal line in the chart below to guide you on exits on bullish trade.
Gasoline

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