This blog is devoted to currency trading and most of the time nothing else is discussed here. Every so often other subjects are mentioned. Today is one of those days and topic is natural gas. Commodities are always of interest to me and I even trade them infrequently. For the most part it happens if I see a long term opportunity and don’t focus on day to day price movement. Besides, fundamentals for commodities are interconnected with currencies. Not the way press would like us to believe, but these markets influence each other to some degree.
Natural gas was mentioned here when Russia and other gas producing countries when in talks of forming a gas cartel. There wasn’t much follow up to it, probably because prices have been falling in a significant fashion. I’m sure we will hear more about that idea when natural gas appreciates in any meaningful degree. For now, though, this commodity is under $3 price tag, the lowest in many years. Gas has decoupled itself from the price of crude oil and is being traded on its own fundamentals, which at the moment consist of massive over supply. I think this situation presents a good long term buy and hold opportunity.
I’m not interested in playing some minor swings here, but rather a bigger, more important move. Price has the potential to move to $8-9 area, which would be a great return even without the use of margin. Problem is timing. I don’t know which major fundamental will cause appreciation of this commodity, so trying to time is, at best difficult. The kind of move I’m looking for will probably take some time, few months, maybe more so this investment must be long term from the start. Using futures creates some specific problems, contract has to be rolled over, which is almost certain here. That’s why I decided to use the ETF for Natural Gas. This instrument moves in step with Natural Gas, by the same percentage point. Plan is to simply salt it away for couple of years, or when gas reaches $8-9 level, whichever comes first. A long term play.
For more immediate results must return to currencies. Post from yesterday, about the Loonie, also had a trade in EUR-JPY within it. Plan was to sell it at 133,85, with an objective of about 80 pips. Swings in yen pairs have been shaky lately and I find myself following these trades a little too closely, even during Asian hours, which is rare for me. I got out of this trade on the first sign of turning around, using 15 M charts, for a gain of 15 pips. price is making another run at the lows at this moment.
Australian Dollar has been very strong today, but it looks to me that it could be over. Moves are overextended, especially in EUR-AUD. I’m going to try a reaction trade here.
This pair was just bought at 1.7077 in search of about 100 pips. I still have a longer term order above the highs on 4H chart, but this is an unrelated, smaller trade. Price is moving my way now and it would be nice if this came to an end today. Of course, nobody knows for sure.
Mike K.
I missed pips off the yen crosses when I sold before the goold old IFO. Everyone was in the know on the upside surprise, so I cleared out and gave away some pips. Then there was the new home sales surprise getting ready for the risk on traders. I know, small positions, wider stops. Sold the crosses again and cleared out when Europe started on a bullish sort of tone last night. I am not happy about the aud, but the stink wafting over from Marketwatch about RAB hiking rates is just more excuse for risk on risktakers. Ditto CAD and NZD. That seems to leave the GBP. Waiting for crude to crack. Guess its all green shoots, except who was it, American Eagle today who couldn’t sell any cheaply sewn trash to gullible young people today. Maybe the green shoots are drowning in 3 dollar gas. Sold a small lot of aud/nzd, though nzd looks weak on daily charts. Still have the usd/mxn long and it seems to want to push higher still.
Gas has an enemy and as soon as it spikes over 3 dollars, Aubrey McClendon is going to go on Clown financial television to tell everyone how profitable Cheezypeek is at 3 dollars ung and how they are going to triple their Haynesville play production next quarter and make even more money off volume. Rest assured America.
You are funny, Vlad. GBP gas a life of its own, looks like, and will have a spur when nobody expects it. Probably soon and other currencies will not be moving then. Everybody will be surprised, once again.
I know - I live in fear of the GBP. Jean Pierre Roth scares the heck out of me also. I just got lucky the last couple of weeks so I am mouthing off.
Years ago, don’t know 2002 or 2003, I participated in the “Global view” forum. There was a guy who made a lot of good calls, but was always on the edge about GBP. He put it something like this “I made a lot of money trading Pound, but then I tend to loose it all”. For some reason I remember it.
I like your opinion about Nat, Gas. And even more impressed with way you go about Long term investment with no margin. Let’s just say that the price goes to 5.50 or so sometimes within next 2 year. This is almost guaranteed. You double money during this time, outpacing virtually all money managers. Price will never drop to zero, and using ETF is a great idea. Good luck.
Speaking of ETFS, USD/JPY is approaching the trend line from January. What do you think about buying the USD/JPY ETF (either unlevereaged or 2X leverage) if the price bounces off that line? Couple be a good year plus trade, no?
Paul, the Yen ETF (FXY is symbol) is quoted the way futures are- inverted compared to spot market. It is not Yen per Dollar but the other way around. Going long FXY means being bullish Yen, same as selling USD-JPY.
If this is your view, then yes, ETF is a good instrument. Although myself, I prefer spot forex. ETF’s for me are great for commodities, especially for long term trades, or investments.
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