March Natural Gas Bearish Gartley - Post Exit Update 1

Above is today's 10 minute chart centered around the 10:30am ET "Natural Gas Storage" Report.

I entered a limit order to re-short at a 50% retracement back up. But, as you can see, price never got that high. At this point, with tomorrow being Friday, I decided it would be better to wait until next week to re-enter this trade, looking for a significant downside in accordance with the Gartley Pattern.

March Natural Gas Bearish Gartley - Exit

At 9:01am ET this morning I Tweeted "Moved Stop to break even on short position ahead of the Crude Oil Inventories at 10:30am ET in case there's a sympathetic reaction.".

At 9:32 I Tweeted the Stop was hit. We exited at 2.860. Profit was:

2.880-2.860=.020*$2500/pt=+$50.

Tomorrow at 10:30am ET we'll get the weekly Natural Gas Storage Report. Leaving a trade on during one of these reports is a craps shoot. That's just gambling without an edge in my opinion. There may be a way to have an edge, but I don't know what it is. I only want to take trades where I have a positive expectancy. So, I don't mind being out. However, we are still in the middle of a Gartley pattern. If we get a negative response to the report tomorrow, or otherwise resume a downward trajectory, I want to re-enter this short trade.

As long as the X point at 3.320 isn't breached, then I'll look for an entry point. I was thinking about having an automatic strategy, like a conditional sell order that's at least a minute after the report and the price is below today's Open or maybe below today's Low. But the reaction to the report might be crazy and last more than 1 minute, so I'll just trade it manually.

While I was considering entering the automatic order, I looked back at some previous Thursday's on the 1 minute chart to see how long the reaction to the report actually lasted. Here's what I found:

These are the 1 minute charts of 1/14/21, 1/21/21, 1/28/21, and 2/4/21. As you can see, the "stop sweeps" adverse reaction, if there is one, doesn't last more than 1 minute on this exceptionally small sample set. Didn't have time for a good study, but still wanted to do a limited search.

So, bottom line for today is we're safely out of harms way with a $50 profit, and looking to re-short NatGas after 10:30am ET tomorrow.

March Natural Gas Bearish Gartley - Update 1

Good day in favor of our short position. Today's candle combined with the past 2 days, form a 3 candle pattern called a Doji Sandwich. This is a Bearish pattern and suggests more downside.

Nothing to do but hold the short position. It hasn't been a big enough move to lower our Stop to break even yet.

March Natural Gas Bearish Gartley

We have a Gartley Pattern that satisfies my "relaxed" set of rules. By "relaxed" I mean it may not fit a traditional strict set of rules, such as the following diagram, but I was taught by a well known trader a more relaxed set of rules that still has a success rate of 65% or so. By "success rate" I mean it hits a 61.8% retracement of the AD leg.

Because its quite possible we'll continue higher and surpass the current D point, I want to mitigate our risk by using the QG mini contract, where 1 point is $2500, as opposed to the full size NG contract where 1 point is $10,000.

I went ahead and entered a bearish trade because the current D point satisfies the AB=CD Pattern where it reached the 61.8% Fib of the green range and the nearby 27.2% Fib extension of the yellow range. Like I just said above, price could continue to rise and make a new D point at the 78.6% Fib of the green range near the 61.8% extension of the yellow range. But if we wait for that and we drop from here instead, we'll miss the whole trade.

Entered today at 2.880.

Stop just over the D point at 3.060.

Target .618AD = 3.057 - .618(3.057-2.268) = 2.569 

    (actual target is 2.575 to account for slippage and .005 minimum increment in the QG contract.)

Risk: 3.060 - 2.880 = .180 * $2500 = $450.

Reward: 2.880 - 2.575 = .305 * 2500 = $762.50

R:R = 762.50/450 = 1:1.7 which isn't great but its acceptable.

(P.S. I know the trailing 0 on a decimal is unnecessary since its implied without writing it but it shows precision of the number and it looks nice. It also matches the way price is shown on the y-axis of the chart.)