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The Lengthy Wave 4 Begins

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We don't usually advise trading wave 4's as they can get overly complicated, however upon waiting for what should be the minute wave B we are advising our clients to go long as there is an off chance the minute wave C could be a minor wave 3 if the bottom is in. This is not our primary count though and we believe there is one more intermediate wave down to complete the primary wave C. Going long in our green box around $2.4 should provide us with at least 800 points of movement to $3.2 to complete the minor wave A. As always when trading natural gas you have to be prepared for extreme volatility and manipulation so be sensible with your position sizing.

Here's a closer look at the recent price action -

Seems that we're getting the extension in the 5th wave, we were fooled into thinking the 5 wave move up from wave 4 was an ending diagonal for the final wave of the wave A, instead it looks like we're going to our original target of $3-3.2 before starting the B wave.

We expect to hit our target box for the wave B this week and then we'll be looking to go long with confidence for the wave C to make some huge profits.

So our B wave has extended out and retraced pretty deep, not entirely uncommon for a B wave to do, trading corrections is never fun nor easy but we believe we're finally going to be moving up for the wave C of 4, we have two targets as outlined by the green boxes on the chart, we will either take out the wave A top and bounce off the 23.6% fib or we'll go flying up in an extended C wave and look to take profits at roughly $4 where the 38.2% fib lies. Either way, if you're not already long, now would be a good time to do so as the risk to the downside with a stop below the wave 3 low gives a very advantagous risk to reward ratio.

So we believe we're still in this wave 4 with the B wave completed now, we're looking for a retracement for minute wave 2 of the wave C and then we will be going long for the wave 3 with a target of $2.8, a solid 700 points of profit!

We're reaching the end of this C wave of the intermediate wave 4, it looks like a nice ending diagonal within this minuette 5th wave of C. Our target is $3 and we will be looking for signs of a reversal before shorting the market to reach our ultimate target of $1.6 to complete this larger correction in red wave C.

It's quite possible gas has topped and if we take out the low at 2.530 then that confirms that this move down from the top is likely a leading diagonal and we're beginning the move down to 1.6.

However it is possible that we still have one more high to go which would satisfy our target of hitting $3.

So we've amended our count and this fits much better for a multitude of reasons, the first being the fibonacci extension ratios have the abc for the A wave at a perfect 1.0 extension. The extension levels for wave C put the 1.618 extension at the 38.2% fibonacci retracement of the entire move down we saw for wave 3 and at a nice round level of $4. In our current wave 2 retracement for the C wave we're nearly at the 78.6% retracement of our breakout for wave 1 of C. So many things are lining up for this big move up that we forecasted over a week ago. With a fantastic reward to risk ratio of 23:1 this is a trade you don't want to miss!

We're pretty confident the top of wave 4 is in now and we will get a sharp decline to approximately $1.6 to complete wave 5 of this C wave correction of the overall bullish trend. We went short after getting 5 waves down from the $3 area and are holidng our short positions to at least $2. We will be looking to go long once we've completed 5 waves down around the $1.6 area.