Shorted Oct Natural Gas today at 2.475, using the QG mini-contract, which is 25% less than the full NG contract.
Here's why I'm bearish:
- Rejected off the upper Trend Line.
- Reject off the upper Bollinger Band.
- High Stochastics.
- Bearish Harami candle pattern.
- Doji sandwich candle pattern.
- Close below the 8ema.
- Continuation/Confirmation to the downside today.
- Heavy volume.
However, there is a risk of support from the bottom Trend Line, which is coincident with a previous Support/Resistance area. Additional possible support from the 20sma and 34ema, as well as at the 38.2% Fib which is in the middle of a previous Support/Resistance area. But after 5 price cycles (pullback followed by an advance higher), with pegged high stochastics, a 50% retracement of the full 5 cycles seems likely.
Target is the 50% Fib of the green range = 2.222, just above the 200sma, 50sma, and lower Bollinger Band.
The chart was captured 14:27 ET, and the NG market day session doesn't close until 17:00, so this may be considered a little early. However, we did get a close below the 8ema followed by confirmation today, which satisfies my entry criteria. It looks like a high probability trade.
This Friday will probably bring a difficult choice because this weekend coming up is a 3 day weekend in the USA. I don't like holding over a 2 day weekend, or even a mid-week 1 day market holiday for that matter :)
Entry: 2.475
Target: 2.225 (2 ticks above the technical target)
Stop: 2.700 (just above the previous candle's high)
Risk: 2.700-2.475=0.225*$2500/pt=$562.50
Reward: 2.475-2.225=.250*$2500/pt=$625.00
R:R=625/562.50=1.1:1 (not great but it looks like a high probability trade)
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