Is Natural Gas hitting the bottom?
Let's face it. We all know that we should start by analyzing the long-term timeframe, and yet, for one reason or another, we don't do it so often. The best of us systematically look at the weekly charts, few actually go higher to the monthly timeframe. Well, we do evil. For example, by looking at the monthly chart of natural gas
it appears to us an interesting landscape, less visible in the lower timeframes: the price is lingering on a long-term support, and it is possibly drawing a textbook inverted head & shoulder
When we encounter a landscape like this, we wonder whether it is an accumulation or distribution process and, in search of an answer, we run to the Commitment of Traders Report
. And, in this case, we get a confirmation of the accumulation hypothesis: the COT index shows that Commercials
are bullish since a long time waiting for the rebound, Funds
have been selling like crazy but now they've come full scale and, above all, the open interest
is historically very low. Here, too, it looks like a textbook bullish setting.
So let's look at the daily chart. Here we notice that the latest drop in prices was accompanied by a progressive decrease in volumes
, a sign that sales were gradually declining in intensity. In addition, the June 4th hammer
looks very much like a stopping volume
bar or something similar. Evidently strong hands do not think it is appropriate to decline further. Rising days ahead?