Natural gas bulls enjoyed a 10%-plus move up, but remain wary of overhead price resistance

Thanks to various bullish comments I'd seen around the blogosphere and internet when natural gas seemed to be breaking out, I got involved with the natural gas and UNG charts and even got on board myself when UNG hit that measured-move target at $12.00. Seems some new readers came around here too, interested in this natural gas trade. So if you've been following what I've been talking about on this, you know that I've been hammering away at the need to see buying volumes show up. The price pattern has been positive, but the volumes are not impressive.

Don't get me wrong - it's possible for natural gas and UNG to get more bullish. And I don't advocate selling UNG unless it loses the support at $12.00 (so a stop might be slightly under $12.00. I'm just saying, don't get locked in to a huge position, and don't freeze up if it goes under that prior June low. Notice that volume on the drop down yesterday was rather large. Today had small volumes on an inside day, within the lower range of yesterday's bar.

PS to Mike - bullish harami? hmm, you're gonna make me go back to "Chart School" and look that up! Ah - found it: Stockcharts.com Chart School: Chart Analysis: Candlestick Patterns (scroll down for harami). Well - maybe ... only thing, I think it would be more like that, if today's candle body were more centered on yesterday's mid-range. Since today's range was in the lower levels of yesterday's, I don't like it as well. Coupled with the volume, I'm concerned. Not gonna sell at this point, just concerned.

The indicators moved to where they can flick up to look bullish - they just didn't do it yet. As a matter of fact, they register that momentum could be leaving the building. If we are "lucky" then natural gas and UNG will go ahead and move up, picking up more momentum on a rise above this week's highs. Maybe higher buying volumes will show up if that happens.

I've included a weekly chart of natural gas below, as a reminder that we shouldn't assume that "the low" is finally done, and we shouldn't get complacent. It would still be a long way back up to the June highs. As I've mentioned before, there's plenty of overhang resistance where those who got trapped since May might be eager to sell. We'll still have to see whether - or not - there's enough buying support to overcome the selling resistance above.