UNG appears to need more consolidation and buy volume, but can be traded cautiously away from this level

Natural gas dropped today and I'm sure many are wondering if it was a wave 2 pullback to start buying. The ETF, UNG, doesn't show great buying volume on the recent bounce, followed by lighter volume on the pullback as typically needed for a swing trade reversal pattern. So I hesitate to recommend buying even a move higher from here, because it doesn't look promising. Still it's possible to buy a move up from here, just keeping a stop and honoring it to minimize loss if it falls back again. It's traced out a wide channel on its downtrend - a move up to $10.50 would be about at the upper bound of that. I can't rule out that it won't drop in another (final) wave down, even if it does test a bit higher first. Part of the reason I day that is because of the $NatGas chart (also below).

The $NatGas chart (which moves differently from UNG, so should be analyzed on its own - but should be referenced) is consolidating from its smart move off its low. It doesn't necessarily have to drop lower or pullback more. But it can, since the correction doesn't look like much yet. It had already poked up to price resistance and moving average resistance, so it wouldn't be surprising for the $NatGas pullback to be only partway through an ABC correction.

Maybe the best way to sum this up is, that it can be traded in whichever direction it selects in a day or so, but with more skepticism for UNG on the long side unless the technicals substantially improve. That approach may mean different things depending on whether you're already in a position and considering an option hedge, or setting up a straddle or other options play. Otherwise, those interested in buying UNG should use good stop protection, or instead, might want to wait a bit longer for a more promising entry. I've been pounding the table about buying volumes for weeks now - and that's still what's needed!