Natural gas bulls and KI$$ traders of the UNG exchange-traded fund: here's what bullish followthrough looks like, and here's the new stop level to use

Folks who trade whether an ETF such as UNG or the underlying such as natural gas - and to all KI$$ traders - here's what followthrough looks like! 9% in one day isn't bad for a plain-vanilla ETF! We may see another resistance area around $14.50 to $15, and then again higher around $16 and $17.50, so how you treat it now depends on your trading time frame and style. For long-term investors there doesn't seem to be a reason to cash out the entire position, but I should not be giving investing advice - I'll stick with chart analysis. So here goes:

In the UNG chart at right, you can see that on Friday there was the inside day candlestick (Mike - similar in a way to the harami it attempted several trading days ago, but it apparently needed to complete a more full Elliott Wave 2nd wave pullback first). I separated the volume window so you can see the nice volume yesterday with the good move up. Price even moved through the 50-day moving average. The indicators are improving too - StochRSI is showing good momentum. But there are other indicators still to work their way to the positive side, including the OBV (under its 30-day MA) - once the OBV perks up more, it will confirm more fully too.

Another reason why it looks good is that price closed above the closing price of those 2 days in July when it tested $14. Momentum players tend to come in when price exceeds a significant swing high like that. This means that most KI$$ players should at this point start breathing easier and holding on to see how far this goes. If everything "works", then we may think natural gas finished its low and it goes up for a long time from here. I'll never say anything is guaranteed, but we do have clear levels to work with and so far the pattern seems to be confirming well. Maybe the cautious way to say it is, there's nothing broken yet from the bullish perspective in these charts!

It's still prudent to use stop loss orders to prevent trading losses if this moves against you. Right now, the new swing low level to use is $12.32 because that's the new important swing low. I know that may seem low, but the prudent approach is to use a stop loss level that's slightly underneat $12.32. If some want a different approach such as a trailing stop, etc., that's a decision that one must wrestle with, and there are certainly articles on how to set stops (I know Dr. Brett Steenbarger with his TraderFeed blogspot is one that has such articles). For myself, I'm willing to believe this is part of a bullish Elliott Wave pattern and shouldn't need much babysitting unless it really breaks the whole bullish picture, in which case that $12.32 level is the right level to use.

For those more intensively trading natural gas, you can see on the weekly chart below that there are resistance levels to watch as I marked with the horizontal lines. The weekly chart looks somewhat similar, in that the StochRSI is in the positive-momentum level which is great, and we'll have to look for the rest of the indicators in the lower windows to come along next.