UNG / DGAZ Trade Update

I've been asked about this a couple of times so I thought I'd show the charts, I still like DGAZ for a pullback in UNG. On the pullback in UNG I want to confirm accumulation and when it looks to be done, close the DGAZ long (3x short Nat Gas) and re-open the UNG long which is a long term primary trend trade that hasn't even broken out of its base yet.

 The top pattern in UNG for its reversal is a little more complex than a "U" shape, it's like a small mini H&S and as such, the short term charts will go positive and negative to form it, but whenever you have a situation in which things are confusing short term, move to longer term charts, take the short term moves that don't mean anything (unless you are using them as tactical entries/exits) and look for the underlying trend.

I have done that here with DGAZ, Natural Gas Futures and UNG, you'll see some trends emerge and different information on each, but confirmation as well.

 DGAZ (3x short nat gas) has a nice, clear 15 min leading positive, it also shows what looks like an inverse H&S reversal/bottom, I could have used longer charts here to show the higher probabilities, but I didn't want to make this look like a long term trend that was somewhere far off in the distance before it materializes.

I used /NG Natural Gas Futures to show the longer term trend and how strong this divegrence is, this is a 4 hour leading negative which means UNG should see a significant pullback and DGAZ a significant rally/bounce.

The 30 min chart of UNG has been spot on with divergences from negative to positive to in line and back to negative with what also looks like a H&S pattern, except a top which is good, you can see the negative divegrence although I didn't draw it in.

So I think DGAZ long is fine, I'd consider adding if possible at the right time. Also I don't see this as connected to the overall market's trend at all, this looks to be doing its own thing.

Long term, UNG long is the trade, likely a primary trend that lasts years, but we're not quite there, this looks like a good chance to make money on the pullback and the pullback gives us a chance to enter UNG at a better price, less risk and hopefully right as it starts a new leg higher.