Over the past four weeks, June natural gas has been within a 4086-to-4448 balance bracket. On Thursday, May 2, 2013, the market broke below a relatively tight three-day balance near the top of the balance bracket, and took out the 4086-balance bracket low.
GO/NO GO Level
The term "GO/NO GO Level" was coined by my mentor, Jim Dalton. Jim uses that term when a market reaches an important reference where the odds of a significant move, in either direction, are high. In this case, the lower extreme of the balance bracket is the GO/NO GO Level. When the market tests an extreme of a balance bracket the two most likely scenarios are the following:
- Gain acceptance outside the balance bracket and accelerate
- Trade near the balance extreme, or outside the balance bracket, and get rejected, which would likely begin a rotation to the opposite end of the balance bracket
If the market gains acceptance below Thursday's afternoon balance range, it may test the 3888-to-3907 gap. If the market gains acceptance below that gap, it may test the next 3738-to-3779 gap below.
If the market gains acceptance back above the 4086-balance bracket low, it may begin rotating back up to the 4448-balance bracket high.
Be patient in entering a trade as it is usually better to be a little late into a trade than to be a little early.
Joseph Souhlakis began his career in commodities in early 2000 when he took a clerk job at the NYMEX for MBF Clearing Corp. For more than three years, Souhlakis acted as risk and position manager for some of the most successful traders in the crude oil and heating oil pits. In 2003, he became a NYMEX member and began his trading career. Souhlakis remained as a house trader for MBF Clearing Corp. until January 2007 when he transitioned to an independent trader. In January 2008, he made the full-time switch from floor trader to electronic trading from home. Learn more about Souhlakis by visiting www.justjoecharts.com. Follow him on Twitter @JustJoeCharts.
Joseph Souhlakis Risk Disclosure:
By viewing this website, you fully understand and agree that all futures, equities, commodities and options markets are subject to numerous implicit and explicit risks, none of which JustJoeCharts can control or influence. You therefore acknowledge and agree that all investment decisions you may make are yours and yours alone and are made solely at your own risk. You should be aware of all the risks associated with trading and investing and you should seek advice from an independent financial advisor before making any trading or investing decisions. The risk of loss in trading futures, equities, commodities and options markets can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. Before deciding to trade and/or invest, you should carefully consider your objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not trade or invest money that you cannot afford to lose. You also agree to bear complete responsibility for your investment research and decisions and acknowledge that JUSTJOECHARTS has not and will not make any specific recommendations to you or any of its subscribers upon which you or any of them is entitled to rely.
Trading and investment carry a high level of risk, and CQG, Inc. does not make any recommendations for buying or selling any financial instruments. We offer educational information on ways to use our sophisticated CQG trading tools, but it is up to our customers and other readers to make their own trading and investment decisions or to consult with a registered investment advisor.