Natural Gas to follow crude oil?
I have been studying the natural gas future price chart because of my previous mention of a natural gas stock with symbol NGAS. The stock was mentioned here and here. The price of natural gas has been slowly trickling upwards although it has not done a retest of its late 2004 swing high as we are currently witnessing with the crude oil price. This retest that crude oil is in the process of doing was mentioned in the post right before this one.
Price of Natural Gas follows symmetry of Crude Oil Futures
The chart you see to the left of this text is quite telling. For starters, note that the bottom half of the chart, the one of the crude oil future price shows us that the entire base building process from mid 2000 to late 2003, early 2004 had a strong ascending triangle chart pattern symmetry. The up thrust in very early 2003 tested the mid to late 2000 swing high on about 8% greater volume and hinted that the 38 level would eventually be broken. Well obviously it has done that already and done so with conviction. Then we see a clear test of the support level of 38 (although it did not quite reach it) and now a retest of the 55 level which I discussed in the posting previous to this one. If you glance back up to the top half the chart you can see that natural gas futures also have an ascending triangle pattern symmetry, but only if you discount the spike in 2000 and end of 2002 as up thrusts within the triangle pattern. If the price chart is compressed to quarterly price data then the whole pattern takes on the symmetrical triangle pattern. Also important to note is that the swing labeled 'B' on the natural gas price chart tested swing 'A' on 90% greater volume. A similar volume scenario exists on the stock NGAS. Anyway, the point of all this is that it says to me that the price of natural gas will also run up for a retest of the 9 level which would be somewhat similar to what crude oil is doing right now. For that scenario to remain in tact, the price of natural gas must hold support along that blue up trend line I have drawn in there.
Incidentally, NGAS already did have a strong move with volume out of its very large symmetrical triangle pattern. This was a wide price spread move that is now being consolidated. A rapid move by the price of natural gas up to that green line should provide NGAS with the incentive it needs to continue trending higher. It is no coincidence that the over all long term price chart pattern of both natural gas and the stock NGAS are symmetrical triangles.
It should be interesting to see if the natural gas futures price confirms the crude oil futures retesting action.