For a long time UNG has been a long term favorite for a primary uptrend as it has been building a massive base, look at the multi-day charts to see obvious changes in character.
UNG daily with a large accumulation area in late 2013 , however a clean breakout to stage 2 was never achieved and a lateral trading range deteriorated making me think UNG was going to come down, in fact we had a trade set-up, I first expected a small bounce, that never came, but the larger trade was a UNG short which has been on track, this was from
The weekly chart shows the long term base and a clearer picture of what has been going on there. There have been since regulations passed through Congress which limit any new power plants to Nuclear or Gas, excluding coal as being too dirty. However what the real reason is is still a mystery. I recall homebuilders being accumulated for a year and a half about the time the tech bubble popped, who would have thought housing would lead the next bull market after the tech revolution? Someone knew and knew years in advance.
As for our purposes, we are looking a bit closer to home. The UNG downtrend of July looks as if it's going to put in a bounce at least along the lines of a swing trade, but I don't think the reversal process area is complete so it may even be larger than that. The assets I would consider would include UNG or UGAZ (leveraged long).
This is the 60 min chart's negative divergence at the end of the range just before UNG started trending down, thus the trade of highest probabilities even though after the initial break of support, a bounce looked to form, but this was on shorter term charts and for whatever reason being a lower probability trade, was run over. I've hear speculation that this is part of try to pressure Russia as they are a Natural Gas giant, but I really have no clue.
UNG's 15 min chart has been showing signs of a positive divegrence forming and other charts are much more clear.
Like the 10 min chart. In the process of migration of a divergence, the 10 min chart (although not as strong as a 15 minute chart as far as the size of accumulation) will have a stronger looking divergence than the 15 minute until the divegrence is strong enough and the stronger divergence develops on the 15 minute chart and perhaps 30-60 minute charts.
In any case, there's a good start to what looks like a reversal process, I do not think this process is complete and if you are interested in a long UGAZ/UNG trade, I'd set price alerts for today's gap, maybe to the $20.75-$20.50 level.
Typically these reversal process' are larger and proportional to the preceding trend, we'll look more at that, but this gives us an opportunity to get in to UNG at a lower price with less risk.
As should be the case, the 5 min divergence looks stronger than the 10 min as the migration process is still the same as described above. There looks to have been a quick shakeout below support before today's gap up, I'd be looking for a position somewhere in the area of recent lows/gap or maybe even a little below recent lows.
Again, if the trade does not come to you on your terms, there's no reason you have to take it, there's a bus every 30 minutes.
From the intraday perspective, we can see the timing indication of a positive divegrence below intraday support near the close as is often the case as middle men stock up for a move which , typically, they filled and have knowledge of, a sort of
front-running in the grey area of law.
The daily chart shows today with a longer upper wick, intraday highs rejected, volume is also rising. I'd like to see larger volume in general at this reversal process as we have already started to see.
If today's move continues, we'd have a sharp "V" reversal, these are more of a reversal event that are rare and usually on some fundamental event the market is discounting.
This looks like a more reasonable reversal process given the downtrend. It takes big money more time to get positions together, they can't just put them together in a single trade like we can without being burnt by predatory HFT's or collapsing the bid/ask stack.
If you look at past reversals in UNG you'll usually notice bottom reversals are more narrow than top reversals. At #1 we have a wider reversal process, at #2 a very sharp "V" reversal process, but consider the parabolic drop/preceding trend. At 3, 4 and 5 there are also sharp "V" reversals, but all have parabolic moves preceding the reversal. At 6 the reversal process is in line with the preceding trend, the same with 7 , 8 and 9 so I'd expect a little wider lateral reversal process to take place before UNG moves higher, this may also add to the size of the positive divergence as well as our upside expectations.
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