Here’s why I think Natural Gas will hit $10

FX: Last week USDCHF touched a series of key technical
support levels at 1.2810 presenting a low risk trade setup for those (like us)
who are bullish. We said then that “Traders may look to go long today (Thursday)
with risk limited to just below the overnight lows.”

The dollar added to those gains on Friday and the wave count appears to be a
“double zigzag” corrective formation of “XYZ.” Since the advance from the
January lows was not violated, and the wave count conforming to conventional
counts, we feel that the dollar is set for a sharp rise in “wave 3” if we can
overcome 89.50 and the 90.30 highs this week. Only a move below 88.20 and then
87.80 would prove us wrong.

Recommended longs from 88.00. Added on a sustained move above 89.50. Took
profits at 90.60 and repositioned long at 89.50.

Gold: No change from last week when we wrote, “Gold is on its way to $600
where we see a top from the triangle breakout before a correction back to $540.
Longtime readers know that we are looking for gold at $800 but still favor a
steep correction given the extreme froth in the metals market (especially in

Stocks: The “wave v” high appears to have ended and aggressive traders
may look to go short with risk limited to Friday’s highs. A more pragmatic
approach would be to wait for sure signs of a confirmation of a reversal — for
a completed “five wave” move below 1270 and then 1245 to confirm a top.

Go short with risk above 1,315. Add to position on a move below 1245.

Bonds: Last week we said to look for a reversal higher from the 105/106
level which might carry us back to 108. We suggested then to lighten up
positions if we begin to move higher and in this weekend’s report we suggested
that a “five wave” move down from the 110 highs appears to suggest that a
reversal will come in the 106/104 area this week.

Crude Oil: Oil is now testing the previous “wave C” high of our “ABCDE”
triangle pattern. As we said last week, key triangle trendline resistance at $68
is approaching and may repel the market for a decline in “wave E” before this
long consolidation in “wave IV” is finished. We were very confident that traders
should buy in the $55/$65 area for a final move to $80 and above before this
bull market takes a needed rest. If we surpass the $68 level next week it may
mean the consolidation pattern is over and we are running higher.

Recommended long at $55 last November. Still looking for a move to $80-$100 over
the coming months.

***** Natural Gas broke down last week, but marginal new lows would only create
even more attractive bullish momentum divergences. We feel the market is wrong
on Natural Gas and the headlines today suggesting that the US may threaten to
attack Iran only solidifies our view from two months ago that Natural Gas stands
to rally back to $10.

is the fund manager at Black Flag Capital Partners and Chairman of
the firm’s Investment Committee, which oversees research, investment and
trading strategies. You can find out more about Jes at
to organizing the hedge fund he was hired by MG Financial Group to help
run their flagship news and analysis department, After four
years as a senior currency strategist he went on to found – a research firm catering to professional traders.