On Monday, September 19, I spoke with Elliott Wave International's Energy Specialty Service editor Steve Craig to discuss where his attention is focused right now.
Nico Isaac: Good morning, Steve. I was checking in to see if one market (or more) in particular has landed on your radar today as a compelling opportunity?
Steve Craig: Hi, Nico. Yes, the October natural gas contract, which posted a new contract low today.
Nico: Why, what's happening?
Steve: Well, I think there is a well-defined corrective Elliott wave pattern in natural gas's price charts that's coming to an end. Prices look to be in the early stages of a smaller degree third-of-third move.
Nico: Holy smokes! A "third-of-third" move. That's the most volatile point of strength of any wave sequence. When do you expect this powerful impulse to begin?
Steve: If my wave count is correct, natural gas should keep correcting in the very near-term, but this trend should end soon and set the stage for a sharp, sustained move in wave "three of three," the middle of the third wave.
Nico: What's helping you to stay on track of this potentially significant turn?
Steve: My answer here is three-fold:
- Both upward and downside risks are clearly defined because my Elliott wave analysis shows precise critical support and resistance levels that the price must "obey" in order for my outlook to stay viable.
- The guidelines of wave formation have helped me to identify the "normal" expectations for the length of a powerful third-wave move -- i.e., prices targets.
- In my latest Energy Specialty Service intraday update on natural gas, I show this chart: (some Elliott wave labels have been removed for this article -- ed.)
Steve: The previous trend in natural gas unfolded as a so-called running flat A-B-C correction. For those new to Elliott wave analysis, running flats are a rare variation of the classic "flat" pattern. They also develop in three waves (A-B-C), but wave B terminates well beyond the start of wave A, while wave C falls short of the wave A's end.
Most importantly, running flat corrections are typically a sign of a market that is "anxious" to re-join the larger trend. This only reinforces the odds of a sharp, third-wave-move in the days/weeks ahead.
Nico: Thank you, Steve.
Well, there you have it.
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