UNG Natural Gas

In our original May 24th Natural Gas long Trade (UNG gained approx. 10-12% in about 10 days), there were many fundamental reasons to believe Natural Gas may finally see a reversal to the very long downtrend as one of the few commodities that traded down during the 2009-20011 period. 

Also don't forget that crazy fractal algorithm that was released in Natural Gas after normal market hours in a very thing market, it sent UNG plunging the next day. Now there's news out that Japan and Germany may be shutting down their nuclear reactors within the next two years. Goldman Sachs has come out with a negative take on Nat. Gas, which probably means they are buying it.

All these things taken together along with the charts, make a bullish case for Natural Gas/UNG.

 The 5 day chart, long term view, UNG has lost all downside momentum and appears to be carving out a substantial base.

 Depending on where the trendline for the neckline is drawn, you can see there's significant pattern implied upside.

 The white box is where we identified the trade, the red arrow is the day after the crazy algo was run the night before.

 If you read my Trade-Guild article on breakouts/false breakouts over the weekend, you should be able to spot them at nearly every major turn. I drew in the resistance/support levels that were broken with red trendlines, the light blue arrows show the numerous false breaks that led to reversals. The red arrows are 3C negative divergences at those false breaks as is the white arrow. Note 3C daily hasn't deteriorated with the recent downside volatility.

 The 3C 5 min chart looks like accumulation has started in UNG

As does the 1 min chart.

We probably want to wait until the positive divergences hit the 15 min chart before considering a long position, but I think the Natural Gas story is far from ending and more likely just beginning.