I think oil and natural gas are pretty stretched technically and even though there is a real shortage in certain goods out there, the market will eventually take down the commodity with it. It's tough that they will crash markets massively, so there's a flight to dollars to defeat the ruble going on with a fight on inflation , real or imagined. I don't think it will be long lived, but I do think we get natural gas to pull back temporarily. There's a couple different paths to the head and shoulders pattern playing out. It's been impressive how gas and oil have held up so let's see what Friday brings. I think it will be a bit wild, don't you?
Comment:
If it breaks out through the pitchfork, my theory is it starts in the lower small two lines and moves up into the more open upward pitch cup, it probably has a 50/50 proposition of staying high if it takes this early route at this really hard fought zone cause it moves right towards that horizontal blue line. Notice how compressed everything is, like it's fighting for every inch at this yellow dotted line right side of the shoulder formation. If it consolidates down the line and then moves up it means it lost the battle at this line and is gearing back up to try again shortly. Less thrust to make the right shoulder and a lower shoulder IMO. 2:1 chance of it dropping if it takes that path.
Trade active:
Watching this it took the pitchfork route and is now either going to slide down the right dotted line of the shoulder or make one last attempt at a larger right shoulder that is to the right of the dotted line. Can't be certain yet, but I'm liking the way this is playing out. I'm in a large position in $KOLD unless the right shoulder forms and breaks about $8.08-$8.10 (The high of the left shoulder is right around there).
Trade active:
Hard to say which way this is going, but I can't say the pattern played out exactly as I was hoping. Big gap up, round trip down and now clawing it's way back up. I'm watching tomorrow closely and if this doesn't drop, I'll probably take my lumps and move on.
Trade closed: stop reached:
Had a stop on this trade around $8.30 in Natural Gas. Closed $KOLD at $6 after buying in around $7. This is what I get for trying to time demand destruction.