Natural Gas September Futures (NYMEX: NGX21).

As per our previous recommendation on Natural Gas November Futures as on September 22, 2021, we recommended a ‘Buy’ rating on the commodity from the technical analysis standpoint. However, considering the recent price action, technical indicators analysis, and high double digit returns on the commodity we are of the view that it is prudent to book profits at the current level as some correction may be witnessed given the recent scenario. Hence, we give a 'Sell' rating on the commodity at the $6.25 (as on September 28, 2021, 10.44 PM (GMT-5), USA, Chicago, IL). The summary of our 'Sell' rating and price movement since the previous recommendation for Natural Gas is provided as below:

Price action and technical indicator analysis (on the weekly chart):

Natural Gas’ prices surged sharply by ~29.24 percent from the recommended entry-level of $4.89 and made a high of $6.32 on September 28, 2021. Prices are now trading near the resistance zone at $6.31. Also the RSI (14-period) are trading at an extreme overbought region at ~88.74 that indicates profit booking might occur from the current levels.

Conclusion:

Based on the above-mentioned price action, historical price resistance, and Relative Strength analysis, we recommend a ‘Sell’ rating on Natural Gas November Futures and suggest investors to book profit at the current price of $6.25 (as on September 28, 2021, 10.44 PM Chicago, IL, USA (GMT -5)).

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00), however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risk, currency risks, and social and political instability risks etc.

Entry Price: For the recommendation(s), the Entry Price is assumed to be at a certain level with a slight deviation on either side. A slight deviation (Example 1.0%-1.5%) on either side in the ‘Entry Price’ can be considered depending upon the upside or downside potential expected and also taking into consideration the Target 1 levels and Stop-loss levels.

Note: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the commodity. Commodity with high volumes is more liquid compared to the lesser ones. Liquidity in commodity helps in easier and faster execution of the order. 

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Risk Reward Ratio: Risk reward ratio is the difference between an entry point to a stop loss and profit level. We suggest ~80% Stop Loss of the Target 1 from the entry point.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is September 28, 2021, 10.44 PM Chicago, IL, USA (GMT -5).

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any commodity evaluation.

The above are illustrative analytical factors used for evaluating the commodity; other parameters can be looked at along with additional risks per se. 

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.