Over the last year, I have listened to various fundamental and technical rationalizations as to why Natural Gas was a good buy at various points in time. Some of these arguments included:
- RSI being "deeply oversold"
- 38.2% Fibonacci level hit
- Bullish divergence on Stochastics
- Hammer candles on daily chart
- Being at support on weekly chart
- 50% Fibonacci level hit
- Various fundamental arguments too numerous to go through
- Sentiment being overly bearish
- 61.8% retracement level hit
- Undervalued versus Oil
- Volume showing capitulation
Unfortunately, none of these techniques proved effective. But there was one technique that did prove profitable, and that was, of course, trend following. Trend followers do not, as Ed Seykota puts it, "predict a nonexisting future", but follow price where ever it may lead.
Currently, a similar situation is unfolding in the general stock market. The S&P 500, surprising the vast majority of traders (including myself), has continued to rally. Every attempt to pick a top in this market has so far failed, as this chart shows:
The chart above shows a failed wedge pattern, and also a failed H&S pattern. Currently, the market is showing an overbought reading. Will this mark the top of this rally? It certainly could be the top- I really have no idea-, but an overbought reading means nothing to me, personally.