May Natural Gas (NGK25): The market reached a recent high of 4.946 on March 10, 2025 but has since experienced a significant decline, closing at 4.024 as of March 21, 2025. This represents a notable shift in market activity and reflects the evolving dynamics of natural gas futures trading.
Analysis:
- Open Interest Trends:
- From March 10, 2025, when the market peaked at 4.946, until March 18, 2025, open interest showed a consistent decline. This indicates that traders were exiting their long positions, likely to lock in profits as prices moved lower.
- Between March 18 and March 21, 2025, open interest began to increase even as prices fell further to 4.024. This behavior suggests the initiation of new short positions by traders, reinforcing a bearish shift in market sentiment.
- Momentum Indicators:
- Current momentum indicators reveal a neutral stance, as they are neither in overbought nor oversold territory. This suggests the market’s downtrend has room to persist without being constrained by reversal pressures often associated with extreme conditions.
- Market Turn Indicators:
- My proprietary market turn indicators, designed to detect potential reversals, are not signaling any signs of the current downward trend reversing. This further confirms the sustainability of bearish conditions in the short to medium term.
Recommendation: To capitalize on the continued downtrend, I recommend selling May mini natural gas futures (QGK25) short at a limit price of 4.005. If the trade is successfully executed, implement a trailing stop loss at 0.211 points to manage risk effectively.
Trading Philosophy: I adhere to strict price confirmation requirements before initiating trades. In this case, QGK25 has provided clear evidence of its sustained downtrend, aligning with my trading strategy that emphasizes market structure and sentiment analysis.
Happy Trading, Dave Register, CTA
