Trade of the Week: short US natural gas
Since front-month, US natural gas futures seem to be topping out, we would like to short these at around $3.40 with a downside target around the $3.00 mark and a stop-loss above last week’s high at $3.59.
(Video Transcript)
Short NY cotton futures trade still good
Good morning and welcome to this week's Trade of the Week on Monday 16 October 2023. On 25 September, we went short New York cotton futures and we are still short those from, I believe, 8,850. So we can see here the price of cotton continues to come off.
So what you can do in this case is move your stop loss level down to break even, thereby making sure that you don't lose anything on this trade going forward if it were to revert to the upside. But our downside target is still much further down so we can let this trade run.
FANG futures a viable option
And we went long US FANG futures, and did so at the beginning of October. So that trade worked out really, really well so far. If you haven't cashed it in, we went in around $7,300.
So right here at the bottom then, I would suggest you move your stop loss level up to, again, above break even, so you don't lose anything on this trade. You can let this one run, or if you're worried about it, you can cash it in. You would still make about a 270-point profit on this one if you did so.
And if you look at last week's trade, we went long the British pound against the US dollar and, again, this one worked out quite nicely so far. If you haven't gotten out of it, move your stop loss level to break even again to make sure you don't lose on this one, in case the recent descent is going to continue
Fired up on short US natural gas futures
With regards to this week's Trade of the Week, I would like to look at natural gas prices, which have shot up because of much colder weather forecasts in the coming days and weeks.
And you can see this very sharp up move, which took us to $3.58 last week. That was a level that we hadn't traded at since January this year, and it looks to me as if we are starting to form a top formation here.
Therefore, I would like to go short around the $3.34 mark with a downside target around the $3 mark taking us back to the early August highs and a stop loss above the current October high at $3,59.
So this week's Trade of the Week is to go short US natural gas futures around the $3.40 mark with a downside target at around $3 and a stop-loss at $3.59.
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