Wednesday, September 14, 2011

Natural gas looks more bullish on this rise ($UNG, $NatGas)

Natural gas has been a stinky position investment for a very long time now, although great for swing traders buying and/or selling on the sharp waves ($NatGas or the ETF, $UNG). But positive divergence on UNG's daily chart and a price pattern that's a possible bullish reversal make it worthwhile for swing longs and maybe KI$$ positions. So "hold your nose" and take a look!

The daily chart for UNG below shows a nice price spike up after what might be a diagonal down which we'd hope to be finalizing the cyclic low, along with positive divergence in the StochRSI indicator. The monthly chart of $NatGas shows it's been coiling in a range for many months. So if it ends up tanking down again with UNG failing under $9.70 then let's cut and run (stop out) then reevaluate. But so long as UNG stays over $9.70 and tests $10.50, where there's much resistance, it finally has a good chance to retest around $11 again.

That would test the 200-day moving average, so taking partial profits there would be a good idea, then consider scaling in more on a pullback before looking for higher levels on what natural gas bulls hope should be a bullish wave path upward.

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