![\"Image\"](\"https:\/\/cdn.jeffclarktrader.com\/JMU\/images\/202304\/20230420-JMU-01_njr736.png\")
<\/p>\nThere’s a good reason why natural gas is known as the “widow-maker.”<\/p>\n
The big swings in either direction entice traders to this volatile market.<\/p>\n
Unfortunately, natural gas has a reputation for blowing up those same traders.<\/p>\n
Just check out this monthly timeframe chart of natural gas futures…<\/p>\n
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From March 2020 to August 2022, natural gas rallied an incredible 456%. But since then, it’s sold off more than 75%.<\/p>\n
This is exactly the kind of volatility I’m talking about.<\/p>\n
One of the big mistakes I see traders make with natural gas is putting far too much weight into what I call common sense variables<\/em>…<\/p>\n For example, thinking that natural gas must go up during winter months because demand will be higher.<\/p>\n But if you look at the chart above, you’ll see this certainly wasn’t the case this winter. From November 2022 to now, natural gas sold off as much as 75%.<\/p>\n Traders that have gone long based off that reasonable assumption have gotten crushed.<\/p>\n It’s a perfect case study of why I stick to technical analysis. Analyzing price charts has allowed me to consistently beat the market over the course of my career.<\/p>\n And right now, my analysis of natural gas tells me to be on the lookout for some amazing trade setups.<\/p>\n Take a look at this four-hour price chart of natural gas to see what I mean…<\/p>\n <\/p>\n The simplest definition of a trend is when a series of pivot points move together in one direction.<\/p>\n In the case of a downtrend, you want to see a series of lower lows and lower highs. An uptrend would have a series of higher highs and higher lows.<\/p>\n As you can see on this chart, the natural gas market has been in a downtrend since March.<\/p>\n But on April 14, the market put in a bottom and went on to break the series of lower lows and lower highs.<\/p>\n <\/p>\n Free Trading Resources<\/strong><\/p>\n Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/p><\/div>\n<\/div>\n <\/p>\n On Monday, natural gas broke out and put in a new high. This is the first sign that the prior downtrend could be over.<\/p>\n Next, we need to see a pullback that holds above the April 14 bottom, thereby establishing a higher low.<\/p>\n This would make an excellent trading opportunity, as the next most likely event would be another higher high.<\/p>\n And because natural gas has sold off so much – going from a high of $10 in August 2022 to a low of $1.94 on April 14 – even a small move higher can mean big gains.<\/p>\n For instance, if natural gas were to trade from current prices of around $2.30 to just $3.00 (the March highs), that would be a 30% move higher.<\/p>\n This makes the risk-to-reward proposition very enticing for natural gas bulls.<\/p>\n I recommend keeping an eye on this market. There could be small fortunes to be made in relatively short order.<\/p>\n Happy trading,<\/p>\n Imre Gams![\"Image\"](\"https:\/\/cdn.jeffclarktrader.com\/JMU\/images\/202304\/20230420-JMU-02_nmr784.png\")
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Analyst, Market Minute<\/em><\/p>\n