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Natural Gas And The 18 Ema
posted Feb 23, 2006 at 06:35PM

Sometimes you see something that looks oversold or overdone from a contrarian point of view, but one is afraid of catching a falling knife.

One can use stops but with things like natural gas you can get sharp gap downs that still leave you in the red.

Sometimes then it may be prudent to use a buy stop..i.e. buy only when it has crossed some technical resistance barrier.

If you remember back in May I started using the 18 ema on the HUI while it was bottoming, and it worked out pretty good in terms of providing entry points.

Out of curiosity I ran a chart on Natgas using the 18ema. It does seem to be a good resistance metric to watch as it tends to repel fake rebounds.

As you can see it held again during the recent bounce attempt. Indeed it threw it back with some force on the weight of very bearish inventory numbers.

I think if you are willing to wait the future at some point will see natural gas prices much higher than today, and it is tickling with important horizontal support. As well the natgas stocks juniors I look at (but don't own right now) seem to be weathering the storm OK. Indeed Admiral Bay Resources is in a good techncal condition for buying if you want to check it out.

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