Natural Gas: Our First Price Target Hit! Ready For the Next One?

Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.

Trading positions

Natural Gas [NGZ21] Long around $ 3.604-3.716 support (yellow band) with targets at $4.009 (already hit!) & 4.355 and stop just below $ 3.424 (lifted up around $3.800 – mid-point from entry to target 1 – since target 1 was hit) – See charts
WTI Crude Oil [CLF22] No position currently justified on a risk-to-reward point of view.

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The Trading Plan

(Source: tenor.com)

We all love it when a trade plan comes together! Since the market has to cope with stronger demand due to lower temperatures, you can see that the rebounding floor (support) provided was ideal for the Henry Hub. It has been supported by unyielding global demand for US Liquefied Natural Gas (LNG), and that also fueled its momentum. The recommended objective at $4,009 was thus hit this morning (during the European session) and the $4.355 level is now the next target.

As I explained in more detail in my last risk-management-related article to secure profits, my recommended stop, which was located just below the $ 3.424 level (below half-yearly swing low), was now lifted up around the $3.800 level, which corresponds to the 50% distance between the initial entry and target 1. By doing so, that trade turns out to be risk-free. Alternatively, you could also eventually use an Average True Range (ATR) multiple to determine a different level (above breakeven) that may better suit your trading style.