Natural gas will be an easy buy/hold decision so long as it remains above Wednesday's low

Natural gas retains bullish potential as it redeemed itself yesterday. The price level as represented by the UNG exchange-traded fund gave natgas bulls (or wannabe bulls) a scare a couple of days ago as it tested back, but did not break the $12.20 level I've described numerous times before. It actually did poke under a Fibonacci .618 retracement price level of $12.71, reaching $12.32 at Wednesday's low. Then yesterday it popped up again, above Wednesday's high, making it a valid candidate as a trigger day. Then made an inside day today (see chart at right). Whew!

The volumes on the rise from $11.91 never picked up to a level I'd be happy with, so I cannot pretend to feel wildly bullish on this. But the selling volumes the past several days weren't too heavy either. From an Elliott Wave chart pattern perspective, the price can have completed a first wave up and second wave pullback, giving it room to work on another wave up (hopefully a third wave, otherwise at least a "C" wave or a wave 1 of 3 upward).

The $NATGAS chart hasn't updated at Stockcharts.com as of the time I'm posting this, so you'll have to imagine the inside day appearing on the daily and weekly charts (below). What you can see is that, like the chart of UNG, the indicators do have positive aspects even if they aren't all chiming in quite yet. It's pretty easy and obvious - and from the chart and Elliott Wave perspective, quite correct - to say that the bulls can run with natural gas and UNG, so long as the price remains above Wednesday's low. The risk reward therefore looks good, as there's plenty of room above from the big picture for the price to move higher. There's obvious price resistance about $4.50 in the $NATGAS chart, and if it gets past that, then about $5.50. That would still be a good move up.

It's also interesting to see that $NATGAS did a better job than UNG of moving back to its triangle apex. UNG was barely able to hold $14.00 even intraday! Maybe it signals something different about the fundamentals for the underlying, futures and spot/cash - or maybe it's simply that speculators who piled in with the ETF were only too glad to cash out after having been scared from the triangle head-fake. It really doesn't matter for trading purposes. The Wedneday low's gotta hold whether you're in $NATGAS or in UNG.

In fact, the make-or-break level is so close by, and so easy to monitor on your own, that it's now easier to put this into the "KI$$" category!