Trade of the week: short US natural gas
We would like to short US natural gas futures on a bounce to 3570 with a stop loss above last week's 2823 high and downside target at 3070.
(Partial video transcript)
This week's trading opportunity
Axel Rudolph: Hello and welcome to "Trade of the week" on Monday 13th October, 2025. And let's look at this week's trade, which is to go short US natural gas, but only on a bounce.
So why do I want to go short? Basically, my signal to go short happened on Wednesday of last week. You can see a bearish engulfing pattern formed on the chart which confirmed that on Thursday. And right now we're trading below that area. So, I want to wait for a bounce. Maybe we won't be able to get in, but I'm happy to miss this one if it doesn't happen because I want to have a reward to risk ratio of 2 to 1.
So, why do I want to go short? Well basically, if you look on the chart you can see that since March of this year we've been in a downtrend. And we've had these ABC corrections to the upside in Elliott wave terms. And then we continue the downtrend. And this is something similar happening here. You can see wave A-B-C up and then the trend should continue. So for that reason, I believe that we are going to head back down again. Now, obviously the fundamental reasons are that there's a lot of ample supply there and also milder weather on the way in the US, hence the decline in the price of natural gas.
Last week's trading outcomes
I'd also like to mention last week's USD/JPY "Trade of the week", which I got completely wrong. I thought the political situation in Japan would not lead to a shift in people's attitudes. But I got it wrong. As you can see on the chart, we went right through my resistance area. Didn't care about any of these higher levels and went through there.
And that's why we only risk 2% per trade because even when we get three in a row wrong, which is what has happened so far this month, I've been wrong three times in a row. Don't forget, at the beginning of the year, I've been wrong four times in a row. And some people gave up. But that's why you risk 2% of capital per trade to keep it small, because then, once this bad spell is over, you tend to then make profits again on other trades and make that loss back. And I think at the moment we're still up around 25% year-to-date, risking just 2% of capital. Just remember, it's all about risk and reward. So anyway, USD/JPY was wrong.
This week's trade in summary
And, coming back to this week's Trade of the week, it is to go short US natural gas futures on a bounce on the Daily Financial Bet at IG at 3570 with a stop-loss above the highs seen last week, and a downside target around the lows seen probably in mid, and towards the end, of September around 3070.
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