As mentioned last Thursday after the release of EIA report
that a rally is expected, we saw NG futures trading shining. The February NG
future contract closed around 184 on MCX.
Natural Gas price chart - Generatebucks.com |
Observing last week, Crude Oil prices were seen trading in
red zone since market demand was expected to reduce. It started with European
Union pointing towards impending global growth.
With fading optimism built around speedy solution to trade
war, I expect the market to be slow and bearish this week. The US President
Donald Trump has indicated that meeting Chinese President Xi Jinping when he’s
in Asia at the end of the month may be too soon in terms of trade negotiations.
Natural Gas investing tips
Trend for natural gas is bearish and as mentioned on
Thursday, we saw NG future price rallying this morning. Feb NG contract was
seen trading at 190.
Prices are still under pressure to decrease in demand due to
return in warmer temperatures. NG futures have been in an oversold zone and a
rally has been long overdue.
Looking at short-term weather outlook, NatGasWeather for
February 8 to February 14 is expecting moderate to slightly high weather. The demand
will be high from Friday through Monday and then moderate for the rest of the
week.
Price action – market is dominated by sellers. We can expect
a profit booking rally but I don’t expect much upside. If you are planning to
create a position, follow a sell on rise strategy. The current rally may
continue but I see a strong resistance at 197-200 levels on MCX.
For short-term traders, crate a short position at 195 for
target of 187-185 with stop loss of 201.
Intraday traders who plan to invest in the rally should be cautious
since I don’t expect much upside.
Crude Oil investing
There are factors supporting Crude Oil prices but I don’t see
much upside this week. Opec along with
its non-Opec partner are on track to implement the agreed cutback of 1.2
million barrels per day from its daily crude output, in an effort to manage the
global supply glut and re-balance the market.
But factors such as growing US production, increase in consumption
of Crude Oil in US and India, strong dollar index is building pressure on
prices. Crude Oil prices have been holding support.
Based on the current fundamentals and trends, I would
suggest a sideways trade in Crude. Buy on dips is a great strategy for
short-term traders.
Buy around 3700 for target of 3850 in upcoming sessions with
stop loss of 3650
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