Natural gas also rises: time to consider being long with this stop loss protection

The sun seems to be starting to shine on natural gas. So as the sun rises, "natural gas also rises" (ouch, sorry! LOL) because it might have made its major cycle low. From the Elliott Wave perspective, and maybe from a cycle perspective, that cannot be confirmed until subsequent action proves it. But today saw a higher high being made with improved buying volumes in UNG (the natural gas ETF) which surely is constructive. Not the kinds of eye-popping buying volumes we'd want for a "c wave" up or trend reversal, but I'll rest more assured if that starts showing up in the next few days. If not, then UNG will encounter more resistance from its near-term moving averages above (see my daily chart of UNG, below). Also below is a chart of Tony Caldaro's (thanks again, Tony!) of the natural gas contract ($NATGAS) from his public chartlist available via his the Elliott Wave Lives On (Objective Elliott Wave) site. The provisional marking of a "b wave" low by Tony is additional support for the potential that natural gas (both $NATGAS that he charts (and I do too, as I posted with my trendlines recently here, use the "natural gas" link to locate) and UNG which I also track) have reversed trend and started uptrending.

Next question is how does one invest or trade it? I'll leave high-powered futures traders to figure out for themselves because they'll often leverage near versus longer-term contracts and options. For many more mainstream traders and investors, a basic fairly safe method is to go ahead and accumulate a long position such as in UNG, but maintain a stop loss at or just under the "b wave" lows. Some might want to place it a bit higher now, at the higher lows of the past several days on the theory that was a small second-wave low that shouldn't be revisited again. That's a matter of risk preference, as well as one's ability to monitor and re-accumulate once the uptrend re-establishes. This isn't the place for detailed trade management advice - it's more ancillary to the point that the low "should be finished"!

Investors and traders will also need to consider your timeframe and style for determining where and when to take profits. If this really is "the low" that many of us have been waiting for, then taking profits occasionally and buying dips should become much easier from the long side.