Medium term
Trade view / 20 September 2016 at 14:50 GMT

#SaxoStrats: Breakout model going long natural gas

Head of Commodity Strategy / Saxo Bank
Instrument: NATGASUSOCT16
Price target:
Market price:

Natural gas is being supported by an eroding supply glut and a potential tightening in 2017.
Our breakout model has given a buy signal in natural gas today on the continuation chart above $2.998/therm.

This follows a strong rally these past couple of weeks during which time weekly injections came in below seasonal averages due to strong weather related demand.


The stop will be changed daily based on the lowest price during the previous 20 days. Updates will be posted as a comment to this trade view on

Rolling to the November future or CFD before expiry of the October contract next week.

Key risks

Weekly inventory injection picking up ahead of the beginning of the withdrawal season beginning early November. Risk of long liquidation from hedge funds having increased bullish bets to a two-year high.

Short-term view
Source: Saxo Bank

 Long-term view
 Source: Saxo Bank


Entry: Buy NGV6 or NATGASUSOCT16 at market

Stop:  $2.665 (based on last 20 days low, i.e. it will move higher in coming days)

Target: Based on our breakout model so no target, only stop

Time horizon: One month

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
21 September
Pandorra Pandorra
Hi Ole. sorry for painful question, but how do you think is there any opportunity to be returned below 3 and on the 2.667 floor, or powered s/l in your view just technical, 'never back' level.. and ahead of Fed I'd like to ask you, are you on the same page with Steve oil-reversal idea or maybe you have another thoughts? Many thanks.
21 September
Ole Hansen Ole Hansen
I have no strong conviction on oil at this stage. The market is caught in a range and very headline driven. EIA status report, Opec will they/won't they and rising production from Libya and Nigeria are just a few of the themes currently creating these movements. Today's EIA status report will be watched to see whether API's surprise 7.5 M bbl drop can be replicated. If so it would go against current surveys pointing to a rise north of 3M bbl.
Natural gas is a volatile beast with an ATR of 0.093 or 3%. The signal is purely driven by our breakout model - currently in Beta mode - which for natgas put the stop at the lowest during the previous 20 days, currently at 2.596. The level at 2.665 mentioned above will be reached on Friday after which time it will slowly be raised almost on a daily basis.
21 September
Pandorra Pandorra
Thank you Ole for sharing, your opinion as always very value.
22 September
Ole Hansen Ole Hansen
Sept 22: The stop has been raised to $2.652
22 September
Marek Kiteboarder Marek Kiteboarder
Hi Ole, previous Stop was at: $2.665 (based on last 20 days low, i.e. it will move higher in coming days), If the stop has been raised - it should be higher - isn't there a typo? thank you
23 September
Ole Hansen Ole Hansen
Sept 23: The stop has been raised to $2.665
27 September
Pandorra Pandorra
Maybe I'm wrong and little bit hurried for now but looks like h&s triple crown pattern is in progress, daily cont. chart, and by this way dgaz is steady for gunning with bullish structure based on 4.84-4.94 levels in 2015/16 years. What're your thoughts Ole?
04 October
estergon estergon
Hi Ole, do you still think the breakout can occur? Should I keep my long position?
07 October
Ole Hansen Ole Hansen
Oct. 7: The stop has been raised to $2.679 and on Monday it will be $2.783
11 October
Ole Hansen Ole Hansen
Oct. 11: The stop has been raised $2.834 and $2.866 on Wednesday
24 October
Ole Hansen Ole Hansen
Weather forecasts calling for a milder than so far projected winter has sent natural gas sharply lower and through the stop level at $2.866. The sell-off has been further strengthened by the fact that hedge funds were the least bearish since at least 2010. During the week ending October 18 they held a combined net-long across four different Henry Hub deliverable contracts of more than 300,000 lots.


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