Natural Gas is moving up in a five wave structure since 1945. Commodities are known to have extended fifth wave structures, making the complete wave structure as a nine legged formation. A fall of Natural Gas below previous grand supercycle IV (circle) low of 1995 at 1.55 would negate all commodity secular bull and inflationary expectations. It would also suggest a drop in the global energy consumption.

This does not seem to be the case now. Hence the preferred view of an extending fifth grand super cycle wave up on Natural Gas. Currently the prices are completing the (II) supercycle wave after which the (III) supercycle wave should take Natural Gas to new historical highs.

Looking at the price structure from 1992, we can count the formation as a leading overlapping diagonal which could have already completed the (II) supercycle wave down in 2010 and has already started the new impulse up. Even if the 2 (circle) primary is short in time the rising trendline from 1992 is a key multi decade support that should hold.

Natural Gas has been an anticipated outperformer for us against Agro and Metals (anticipated underperformers). The 30 day performance illustrates that zinc, nickel, tin and sugar fell while Natural Gas delivered gains. We expect the trend to continue. We will review if prices push back to multi decade trendline supports yet again.

Mukul Pal, CMT, Orpheus Capitals, Global Alternative Research