LMFX PAMM


Ingredients in Developing a Strong Natural Gas Hedging Strategy

Ingredients in Developing a Strong Natural Gas Hedging Strategy

Natural gas is in massive quantities by two types of utility companies. The first are utilities that sell natural gas directly to customers for cooking, heating water, and warming their homes during winter. The second are utilities using natural gas as a fuel to produce electricity, then supply it to consumers to power their homes and businesses. Both types of utilities have immense natural gas price risk exposure, and both have a responsibility to properly manage their natural gas price risk.

 

Given this responsibility, what part can an expert energy hedging advisory firm play in the management of risk for utility companies and consumers?

 

Do Companies Need to Hedge Natural Gas?

In most cases, yes! Natural gas has historically been one of the most volatile commodities and can experience huge price swings. However, over the past few years, many utilities have been lulled into a false sense of security as prices have settled into a relatively low trading range. However, there is not guarantee that this will last forever, and the increased use of natural gas in the U.S. for electricity generation, exports to Mexico, and the rise in LNG will change the underlying fundamentals of the market in coming months and years. To that end, utilities should now begin to frame a strong natural gas hedging strategy to deal with the likelihood of rising future prices. An experienced energy hedging advisory service will obviously recommend developing a hedging strategy that both mitigates risks and can yield the greatest benefit.

 

Developing an Effective Hedging Strategy

Every company has different exposures to price risk, but companies engaged in commodity transactions such as natural gas and crude oil can effectively mitigate risk by developing a hedging strategy that accounts for their goals and risk appetite. A statistically based hedging product that pinpoints when to hedge, which maturity to use, how to scale in, and when to restructure, can be very effective for companies who buy and sell energy commodities and look to mitigate their risk exposure. An expert advisory company can further pitch in to help provide a roadmap on hedging with options, futures, and other derivatives.

 

Statistical Models Rather Than Long-term Forecasts to Manage Risks

Many energy hedgers make the mistake of relying upon long-term energy forecasts to make hedging decisions. Forecasting price, is a lot like forecasting weather. In the short-term we can be accurate, but in the long-term it becomes much more difficult because of underlying factors that change on a day-to-day basis. Therefore, to execute an effective hedging strategy it is important to understand price cycles that will help to gauge when prices are statically high or low, when to hedge, what exposure to hedge, and what types of instruments to use. This can then be custom tailored to first each company’s unique goals and exposure to price risk.

 

Conclusion

In order to build a strong natural gas hedging strategy companies and traders should rely on a statistically based hedging product. Also, it should be paired with a strategy that used the statistical models hedge triggers to meet each companies unique hedging goals and risk appetite.

Like what you've read?

Join thousands of other traders who receive our newsletter containing; market updates, tutorials, learning articles, strategies and more.

Previous Entry   Next Entry

Gold Price Could Break Higher Toward $1,220 Vs US Dollar

Gold Price Could Break Higher Toward $1,220 Vs US Dollar

  • – Gold price is slowly recovering and is currently trading above $1,205 against the US Dollar.
  • – There is a major bearish trend line in place with resistance at $1,214 on the hourly chart of gold versus the USD.
  • – Recently in China, the Trade Balance report for July 2018 was released by the General Administration of Customs of the People’s Republic of China.
  • – The outcome was below the forecast of $39.33B as there was a trade surplus of $28.05B (YoY).

Chinese Trade Balance

Recently in China, the Trade Balance report for July 2018 was released by the General Administration of Customs of the People’s Republic of China. The market was looking for a trade surplus of $39.33B in July 2018 compared with the same month a year ago.

 

The actual result was below the forecast of $39.33B as there was a trade surplus of $28.05B (YoY). Imports of goods and services in July 2018 increased 20.9% (YoY), more than the forecast of +6.9%. Exports of goods and services in July 2018 increased 12.2% (YoY), more than the forecast of +10.0%.

 

Gold price is slowly recovering, but it must break the $1,214-1,215 resistance area to gain upside momentum in the near term.

 

Gold Price Technical Analysis

After a major dip, gold price formed a decent support near the $1,202 level and recovered against the US Dollar. The price started moving higher, traded above $1,210 and later formed an intermediate low near the $1,207 level.

 

Gold Price Technical Analysis

 

The price recently broke the 50% Fib retracement level of the last decline from the $1,216 high to $1,208 low. It is also trading above the 100 hourly simple moving average and $1,210. Therefore, the price may continue to move higher above the $1,212 level in the near term.

 

However, there is a major bearish trend line in place with resistance at $1,214 on the hourly chart of gold versus the USD. The price must break the trend line resistance and $1,215 to gain upside momentum in the near term.

 

Above $1,215, the price may perhaps move above towards the $1,220 level. On the flip side, if there is a downside correction, the price will most likely find support near the $1,210 and $1,208 levels.

Tags: , , , ,

Like what you've read?

Join thousands of other traders who receive our newsletter containing; market updates, tutorials, learning articles, strategies and more.

Previous Entry   Next Entry

Gold Price Could Break Above $1,225 Vs US Dollar

Gold Price Could Break Above $1,225 Vs US Dollar

  • – Gold price is trading above key support levels at $1,220 and $1,218 against the US Dollar.
  • – There is a crucial contracting triangle forming with resistance near $1,223 on the hourly chart of gold versus the USD.
  • – Recently in China, the Manufacturing Purchasing Managers Index (PMI) for July 2018 was released by the China Federation of Logistics and Purchasing (CFLP).
  • – The outcome was below the forecast of 51.3 as there was a decline in the PMI from 51.5 to 51.2.

Chinese NBS Manufacturing PMI

Recently in China, the Manufacturing Purchasing Managers Index (PMI) for July 2018 was released by the China Federation of Logistics and Purchasing (CFLP). The market was looking for a decline from the last reading of 51.5 to 51.3.

 

The actual result was below the forecast of 51.3 as there was a decline in the PMI from 51.5 to 51.2. Looking at the official non-manufacturing PMI, there was a decline from the last reading of 55 to 54, whereas the market was aligned for no change.

 

Gold price is trading above the $1,220 support and it seems like it could break higher above the $1,225 resistance in the near term.

 

Gold Price Technical Analysis

Recently, there was a downside move in gold price from well above the $1,230 level against the US Dollar. The price declined and traded below the $1,225 and $1,222 support levels plus settled below the 100 hourly simple moving average.

 

Gold Price Technical Analysis

 

However, losses were protected by the $1,218 support area. The price recovered and an intermediate low was formed at $1,220. At the moment, there is a crucial contracting triangle forming with resistance near $1,223 on the hourly chart of gold versus the USD.

 

An initial resistance is near $1,222 and the 38.2% Fib retracement level of the last decline from the $1,224 high to $1,220 low. However, the price must break the triangle resistance to gain traction.

 

Moreover, a break above the 50% Fib retracement level of the last decline from the $1,224 high to $1,220 low could help gold buyers in the near term. Above $1,225, the price could move towards the $1,332 level. On the downside, key supports are at $1,220 and $1,218.

Tags: , , , ,

Like what you've read?

Join thousands of other traders who receive our newsletter containing; market updates, tutorials, learning articles, strategies and more.

Previous Entry   Next Entry

Using a Crude Oil Forecast with Technical Trading Indicators and Signals

Using a Crude Oil Forecast with Technical Trading Indicators and Signals

Crude oil traders and market technicians know how unpredictable the know how unpredictable the commodity markets can be. Crude prices not only reflect supply and demand but also geopolitical pressures, weather, demand for products, and the changing dynamics of the global economy. This makes crude prices a challenge to trade profitably. However, with a good crude oil forecast and the combination of the right technical trading indicators and signals, one can create a good set of rules to improve trading results.

 

Trading Crude Oil: What Do You Need?

When analyzing the crude oil markets it is becomes clear that crude oil trends well, but changes direction very quickly. Therefore, to ensure that you make the right call and successfully time trade entries and exits, you should be armed with a definitive plan of action, one that relies on the identification of trend direction, potential stalling points, and technical trading signals that confirm directional changes so that you can effectively time entry and exit signals.. Such a system should be made of rules that can be tested, either on paper by hand or via an automated back test. Testing the system and trading it live on paper before trading with real money can help you find weaknesses in the system and inconsistencies in your rules.

 

You should also have in depth knowledge of the energy markets and closely watch a short-term technical crude oil forecast. You cannot simply base trade decisions on what you read in the expert news columns. This means you require an accurate forecast got from a trusted source.

 

What to Look for in an Effective Crude Oil Forecast

Charts tell traders everything that the market knows about itself and how those factors are affecting prices. But reading charts and deciphering what they are telling us about price action can be tricky. This is why it is important to have a chart specialist, or technical analysts, that is well versed in reading and deciphering the price action on charts. A good analyst, or price forecast, will tell you the direction of the trend, probable targets and potential stalling or turning points, and the odds for reaching any given level.

 

Armed with this type of information a trader can make more effective trading decisions, know exactly how much risk to take, and what bar length to trade. An effective and accurate forecast will also help a trader adjust their trading strategy as market conditions change. For man, their trading rule will adjust when the market is trending versus correcting or when the market is in a neutral and choppy trading range.

 

Look For Best in Class Technical Trading Indicator Packages

Always go for the most reliable technical analysis trading indicator packages available in the market. They generate color coded entry signals by analyzing momentum, bar patterns, volume, and many other factors. For instance, those that use Kase StatWare, the color-coded dots make it uncomplicated to gauge trend direction and strength and the appropriate time to enter trades. Moreover, these self-optimizing indicators become even more effective when paired with a crude oil forecast like the Kase Commentary on Crude Oil, which tells traders the market’s targets, stalling points, and the probabilities for such levels.

 

Conclusion

To make the conclusion, an accurate crude oil price forecast and the right trading indicators and signals go a long way in mitigating risk in the very volatile energy markets.

Like what you've read?

Join thousands of other traders who receive our newsletter containing; market updates, tutorials, learning articles, strategies and more.

Previous Entry   Next Entry

Gold Price Could Resume Upside Above $1,260 Vs US Dollar

Gold Price Could Resume Upside Above $1,260 Vs US Dollar

  • – Gold price traded as high as $1,265 before starting a downside correction against the US Dollar.
  • – There is a major bullish trend line in place with support at $1,255 on the hourly chart of gold versus the USD.
  • – Recently in China, the Consumer Price Index for June 2018 was released by the National Bureau of Statistics of China.
  • – The outcome was below the forecast of 0% as there was a decline in the CPI in June 2018 by 0.1%.

Chinese CPI

Recently in China, the Consumer Price Index for June 2018 was released by the National Bureau of Statistics of China. The market was looking for no change in the CPI in June 2018 compared with the previous month.

 

The actual result was below the forecast of 0% as there was a decline in the CPI in June 2018 by 0.1%. Looking at the yearly change, there was a rise of 1.9% in the CPI, more than the last +1.8%. On the positive side, the Producer Price Index in June 2018 rose 4.7% (YoY), more than the forecast of +4.5%.

 

Gold price is currently correcting lower, but it remains well supported above the $1,255 and $1,252 levels.

 

Gold Price Technical Analysis

There was a decent upside wave in gold price from the $1,251 low against the US Dollar. The price traded higher and broke the $1,258 and $1,260 resistance levels to settle above the 100 hourly simple moving average.

 

Gold Price Technical Analysis

 

The price traded as high as $1,265 and later it started a downside correction. It moved down and broke the 38.2% Fib retracement level of the last wave from the $1,251 low to $1,265 high. However, declines were protected by the $1,255-1,256 support zone.

 

There is also a major bullish trend line in place with support at $1,255 on the hourly chart of gold versus the USD. The same trend line is near the 61.8% Fib retracement level of the last wave from the $1,251 low to $1,265 high.

 

Therefore, it seems like the price remains well supported above the $1,255 level. A break above the $1,260 level could open the doors for an upside move towards $1,265.

Tags: , , , , ,

Like what you've read?

Join thousands of other traders who receive our newsletter containing; market updates, tutorials, learning articles, strategies and more.

Previous Entry   Next Entry

Gold Price Accelerating Declines Below $1,245 Vs US Dollar

Gold Price Accelerating Declines Below $1,245 Vs US Dollar

  • – Gold price declined recently and broke a key support near $1,245 against the US Dollar.
  • – There is a key bearish trend line formed with resistance near the $1,245 level on the hourly chart of gold versus the USD.
  • – Recently in the US, the Institute for Supply Management (ISM) Manufacturing Index for June 2018 was released.
  • – The outcome was above the forecast of 58.4 as there was a rise in the Index to 60.2.

US Institute for Supply Management (ISM) Manufacturing Index

Recently in in the US, the Institute for Supply Management (ISM) Manufacturing Index for June 2018 was released. The market was looking for a decline in the index from the last reading of 58.7 to 58.4.

 

The actual result was above the forecast of 58.4 as there was a rise in the Index to 60.2, which is the 110th consecutive month increase. Moreover, the New Orders Index posted a reading of 63.5, a bit lower than the last reading of 63.7. The report added that:

 

New Orders, Production, and Employment Growing, Supplier Deliveries Slowing at Faster Rate; Backlog Growing, Raw Materials Inventories Growing; Customers’ Inventories Too Low, and Prices Increasing at Slower Rate; Exports and Imports Growing.

 

Gold price remained in a bearish zone below the $1,245 level and it seems like recoveries in the near term could be capped.

 

Gold Price Technical Analysis

After forming a high near the $1,255 level, gold price started a downside move against the US Dollar. The price declined and broke the $1,250 and $1,245 support levels to settle below the 100 hourly simple moving average.

 

Gold Price Technical Analysis

 

The price recently traded as low as $1,237.82 and it is currently consolidating losses. An initial resistance is near the 23.6% Fib retracement level of the last decline from the $1,255 high to $1,237 low.

 

There is also a key bearish trend line formed with resistance near the $1,245 level on the hourly chart of gold versus the USD. The same trend line is near the 50% Fib retracement level of the last decline from the $1,255 high to $1,237 low.

 

Therefore, if the price corrects higher from the current levels, it is likely to find sellers near the $1,245 and $1,246 levels. On the downside, supports are seen at $1,237, $1,235 and $1,232.

Tags: , , , , ,

Like what you've read?

Join thousands of other traders who receive our newsletter containing; market updates, tutorials, learning articles, strategies and more.

Previous Entry   Next Entry

Crude Oil Price Recovery Could Be Capped Vs US Dollar

Crude Oil Price Recovery Could Be Capped Vs US Dollar

  • – Crude oil price recovered after trading below the $63.50 against the US Dollar.
  • – There are two bearish trend lines formed with resistance at $65.10 and $65.65 on the hourly chart.
  • – Recently in the US, the API Weekly Crude Oil Stock report for the week ending June 15, 2018 was released.
  • – As per the report, there was a decline in the crude oil inventories by 3.016 million barrels.

 

API Weekly Crude Oil Stock

Recently in the US, the API Weekly Crude Oil Stock report for the week ending June 15, 2018 was released. The market was positioned for a drop in the crude oil inventories by roughly 1.20 million barrels.

 

However, the actual result was better as there was a decline in the crude oil inventories by 3.016 million barrels. It was a positive outcome and had an upside impact on oil prices.

 

The price moved above the $64.50 level, but it seems like it is approaching a couple of important hurdles below the $65.60 level.

 

Oil Price Technical Analysis

There was a sharp drop in crude oil price from well above $66.00 against the US Dollar. The price declined heavily and broke the $65.00 and $64.00 support levels. There was also a close below the $65.00 level and the 100 hourly simple moving average.

 

Oil Price Technical Analysis

 

The price traded as low as $63.35 before a fresh recovery was initiated. The price jumped above the $64.50 resistance and the 50% Fib retracement level of the last decline from the $67.00 high to $63.35 low.

 

However, there are many barriers above the $65.00 level. There are two bearish trend lines formed with resistance at $65.10 and $65.65 on the hourly chart. Oil price was already rejected once from $65.60 and the 61.8% Fib retracement level of the last decline from the $67.00 high to $63.35 low.

 

Therefore, if the price continues to move higher, it could face a strong barrier near the $65.50-60 zone. As long as it the price is below this, it could move down once again below the $64.50 level. On the flip side, above $65.60, the price may move towards the $66.00 level in the near term.

Tags: , , , , , ,

Like what you've read?

Join thousands of other traders who receive our newsletter containing; market updates, tutorials, learning articles, strategies and more.

Previous Entry   Next Entry

Crude Oil Price is Back in Downtrend Vs US Dollar?

Crude Oil Price is Back in Downtrend Vs US Dollar?

  • – Crude oil price started a downside move from well above $68.00 against the US Dollar.
  • – There is a crucial declining channel in place with resistance near $65.25 on the hourly chart.
  • – Recently in China, the Caixin Services PMI for May 2018 was released.
  • – The outcome was around the market forecast as there was no change from the last reading of 52.9.

 

China’s Caixin Services PMI

Recently in China, the Caixin Services PMI for May 2018 was released. The market was positioned for a no change from the last reading of 52.9 in May 2018.

 

The actual result was around the market forecast as there was no change from the last reading of 52.9. Moreover, China’s Composite Output Index also was unchanged from April’s reading of 52.3.

 

Overall, the outcome was neutral and it seems like crude oil price current recovery may be capped near $65.25 and $65.50.

 

Oil Price Technical Analysis

After a decent upside move, crude oil price formed a short-term top near the $68.40 level against the US Dollar. The price started a downside move and broke a few important supports such as $68.00, $67.40 and $66.00.

 

Oil Price Technical Analysis

 

The price settled below the $66.00 support and the 100 hourly simple moving average. It is also following a crucial declining channel with resistance near $65.25 on the hourly chart. The recent low was $64.52 from where the price started an upside correction.

 

The price has moved above the 23.6% Fib retracement level of the last decline from the $65.97 high to $64.52 low. However, there is a major hurdle on the upside near $65.25, channel, and the $65.50 barrier.

 

Moreover, the 50% Fib retracement level of the last decline from the $65.97 high to $64.52 low is also near $65.25 to act as a key resistance. If there is an upside break above the $65.25 level and $65.50, there is a chance of a recovery towards $66.00. On the other hand, if the price fails to move higher, it could resume its downtrend and it may perhaps break the last low of $64.52 to extend its decline.

Tags: , , , , , ,

Like what you've read?

Join thousands of other traders who receive our newsletter containing; market updates, tutorials, learning articles, strategies and more.

Previous Entry   Next Entry

Gold Price Approaching Next Break Vs US Dollar

Gold Price Approaching Next Break Vs US Dollar

  • – Gold price is trading nicely above the $1,300 support level with a positive angle against the US Dollar.
  • – There is a contracting triangle forming with support at $1,300 on the hourly chart of gold versus the USD.
  • – Recently in China, the Manufacturing Purchasing Managers Index (PMI) for May 2018 was released by the China Federation of Logistics and Purchasing (CFLP).
  • – The outcome was above the forecast of 51.3 as there was a rise in the PMI to 51.9.

China’s Manufacturing Purchasing Managers Index

Recently in China, the Manufacturing Purchasing Managers Index (PMI) for May 2018 was released by the China Federation of Logistics and Purchasing (CFLP). The market was looking for a decline in the PMI from the last reading of 51.4 to 51.3.

 

The actual result was above the forecast of 51.3 as there was a rise in the PMI to 51.9. Looking at the official non-manufacturing PMI, the market was looking for no change from the last reading of 54.8. However, the result was positive as there was a rise in the PMI to 54.9.

 

Gold price is currently trading with a positive bias and it seems like it could break the $1,305 resistance for further gains.

 

Gold Price Technical Analysis

After trading towards the $1,292 level, gold price found support against the US Dollar. The price started an upside move and traded above the $1,300 resistance level. There was also a close above $1,300 and the 100 hourly simple moving average.

 

Gold Price Technical Analysis

 

The price recently traded towards the $1,305 level where it faced sellers. A high was formed at $1,304 and the price corrected below the 23.6% Fib retracement level of the last wave from the $1,295 low to $1,304 high.

 

However, the downside move was protected by the $1,300 support and the 100 hourly SMA. Moreover, the 38.2% Fib retracement level of the last wave from the $1,295 low to $1,304 high also acted as a support.

 

It seems like there is a contracting triangle forming with support at $1,300 on the hourly chart of gold versus the USD. The price may soon make the next move either above $1,305 or below $1,300 in the near term.

Tags: , , , , ,

Like what you've read?

Join thousands of other traders who receive our newsletter containing; market updates, tutorials, learning articles, strategies and more.

Previous Entry   Next Entry

Crude Oil Price Approaching Crucial Support Vs US Dollar

Crude Oil Price Approaching Crucial Support Vs US Dollar

  • – Crude oil price traded as high as $72.83 before correcting lower against the US Dollar.
  • – There is a crucial bullish trend line formed with support near $71.60 on the hourly chart.
  • – Recently in the US, the API Weekly Crude Oil Stock figure for the week ending May 18, 2018 was released.
  • – As per the report, there was a drop in the crude oil inventories by 1.300 million barrels.

 

API Weekly Crude Oil Stock

Recently in the US, the API Weekly Crude Oil Stock figure for the week ending May 18, 2018 was released. The market was positioned for a decline in the crude oil inventories by around 0.80 million barrels.

 

However, the actual result was positive as there was a drop in the crude oil inventories by 1.300 million barrels. Looking at the gasoline stockpiles, there was a rise in inventories by around 980,000 barrels, and inventories of distillates saw a draw of 1.3 million barrels.

 

There was a downside move in crude oil price, but it seems like the price is approaching a crucial support above $71.40-50.

 

Oil Price Technical Analysis

There were further gains in crude oil price above the $70.00 level against the US Dollar. The price traded above the $71.00 and $72.00 resistance levels. The upside move was positive as the price traded close to the $73.00 level and formed a high near $72.83.

 

Oil Price Technical Analysis

 

A downside correction was initiated recently and the price moved below the 50% Fib retracement level of the last wave from the $71.27 low to $72.83 high. Sellers even managed to push the price below the $72.00 support area and the 100 hourly simple moving average.

 

At the moment, the price is trading just below the 61.8% Fib retracement level of the last wave from the $71.27 low to $72.83 high. On the downside, there is a crucial bullish trend line formed with support near $71.60 on the hourly chart.

 

Therefore, if the price corrects lower, it is likely to find support near the $71.60 and $71.50 levels. Should there be a downside break below $71.50, the price could correct further towards the $71.00 level.

Tags: , , , , , ,

Like what you've read?

Join thousands of other traders who receive our newsletter containing; market updates, tutorials, learning articles, strategies and more.

Previous Entry   Next Entry

Join Our Newsletter:

US & Canadian Traders Welcome Make the trade