Wednesday, April 28, marks the last trading day for the natural gas futures contract from May 2021. Active NG traders can switch to the June contract on Friday, April 23, before the opening. The usual fees and commissions for the execution of trades apply.
For the latest information on contract expiration, roll dates, announcements and more, visit the NinjaTrader Trade Desk Calendar and bookmark it!
Price action in natural gas before the contract roll
Natural gas (NG) futures have been trapped in fairly choppy territory since the beginning of the year, having failed to hit the highs set in late November last year. In mid-February the market saw selling pressure as contracts hit $ 3.30 and tested resistance levels set last year. These selling pressures resulted in prices propping up at levels that have been tested near the $ 2.40 level several times over the past 4 months. The market found support at these levels in mid-March and has since consolidated in an even narrower range.
However, this consolidation is happening in a technically weak area according to several indicators. Momentum indicators like the Ichimoku cloud, which show traders when markets are moving in and out of technically strong or weak areas, show NG futures in the bearish area below the cloud. The cloud is an easy to read indicator. Prices trading above the shaded area are in a technically bullish area while trading below the cloud is weakness.
As can be seen in the chart below, NG futures have tested support levels below the cloud, indicating that price movements within this range are showing weakness. The cloud’s downward tilt also suggests a change in the downside momentum, which could pose a risk to traders who are long in the event the market retests support levels
This is price action and these levels of support are important for traders to consider as the contract list approaches. The final trading date for NG May contracts is April 28th. Traders holding positions need to be aware of this and these key levels in order that they can best determine how to manage their position and move, if at all, to the front month contracts.
Other things to look out for
Volume and liquidity can be “unusual” during a roll period. Traders could see a surge in contract volume in the previous month as other speculators and hedgers roll out of their positions into the next month’s contract. This is something that day traders should be aware of as liquidity in front month contracts could run dry as we near the final trading date for the front month contract as most market participants are likely already trading the June contracts.
Order management is also important. When managing a position in a role, traders want to be present and in front of the screen to ensure that they are fully filled on both legs of their trade (closing the current position and opening the “new” position) as a partial fill Trader’s risk profile.
While the above may seem obvious to some, contract lists offer traders an opportunity to make mistakes. However, if they keep these things in mind, they should play a successful role and maintain their positions.
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