One of my beliefs about Market price is – they’re random and can get very random at certain times. As a trader our task is find good trading opportunities with exceptional risk: reward and trade that setup with proper risk management. Recent Price action in natural gas has reinforced that concept again. Take a look at the Price action on two related timeframes 4h and daily chart.
Natural Gas on Daily chart
Natural Gas on 4h Chart
On one hand daily chart, points out that Prices are still in the uptrend and recent structure may be nothing more than a correction. On the other hand, 4h chart indicates that prices are in range and lead to a conclusion that trend is terminated temporarily. It’s a paradoxical implication for beginners and novice traders, but experienced professionals are well aware and experienced in this kind of ambiguity that happens with multi time frame analysis.
How to get proper sense in these kinds of scenarios? Well it takes experiences to put both of these perspectives in a single context. A novice trader may think with perplexed notion that Natural gas is ranging on 4h and correcting on daily chart but a professional combines both and concludes it as a structural correction that has ranging characteristics on lower time frame due to higher volatility.
So in essence NG is in correction and prices must break 3.344 to make further advances upside – the breakout must clear and shouldn’t be a false breakout. After the correction, the trend can advance upside if there is enough buying pressure or it can reverse (it clearly breaks 3.000) if selling pressure becomes more expressive.
