Starting Some Buying Operations

Natural gas futures on the Nymex had a negative week before closing 3.8% lower than the previous one at $2.74. EIA reported a rather bullish nonetheless build of 28 Bcf in working underground stocks for the week ended July 24. Total inventory is currently at 3,084 Bcf, 1% lower y/y, 6.4% above the 5-year average.

We have been selling rallies since last November, and we now want to start some buying operations on seasonality.We predicted that the market was going to meet its floor for a second time in summer. We now want to start buying the dip while we anticipate a breakout in uptrend for the coming months. Despite the dog days in several states of the Lower 48, we do not expect any spectacular raise in price right away. We believe that a ceiling of $4.00 is attainable for the coming winter contracts. We want to be buying every range above its previous support level until we meet January. The same ranges will give multiple times the profit. We want to operate on the near-term charts on directional trading. Any pricing above $4.00 in January will have to be considered only as a spike on profiteering behavior from some market participants. This gives us a benchmark also for the secondary market, where we can hedge using Options.

US macroeconomic data for the second quarter are poor. High fossil fuel prices are draining resources from the rest of the economy. In Europe, where the renewable energy market is larger, macroeconomic indicators are strikingly more positive. I believe that, even after the interest rate hike, the US government will finally do what is necessary to secure cheaper energy for its citizens. After all, the midterm elections are just around the corner. These factors should encourage patience regarding what I previously said about the uptrend; support levels ought to rise gradually. US macro data and the Dollar Index have to be monitored routinely. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.