UGAZ/UNG Position Update

The UGAZ long position is up about +12% and technically UNG is still in the base area and hasn't moved to stage 2 yet. There are some near term signs building that a gap fill (or perhaps more, but I don't have evidence for any more than a gap fill at present) is building. The way you look at this scenario is totally a function of your trading style as the 60 min charts in UBG are leading positive so the highest probabilities are to the upside, that doesn't mean on a shorter term basis that gaps can't be filled.

With a +12% gain at present I'll likely leave UGAZ long in place unless some further evidence builds that looks like it would be tactically worthwhile to book gains and re-enter later, I don't have that evidence as of now.

 UNG's 60 min chart falling out of a multi-month range/ triangle, declining (stage 4 ) and building a base (stage 1).

Here's the same 60 min 3C chart with distribution inside the triangle range sending UNG lower and a leading positive 60 min 3C chart in what is best described as an "Old School" double bottom or "W" base, which are the type that use to fall short of testing the previous base lows, this is not the typical double bottom base / W base now as the second base low almost always performs a head fake and runs stops below the previous base lows (*(That's the "Or something larger" scenario mentioned above that I have no evidence for, other than the fact it didn't happen).

 Looking at the trend of the 3 min chart it's in a leading positive divegrence, but zooming in to an intraday basis...

There was confirmation running up to the mid-August highs of the base and then small distribution , just enough to send UNG back down to lower prices where it can be accumulated more and strengthen the base, however the recent gap up has no confirmation at the 3 min chart which it should have been able to pull off by now so I suspect a gap fill is becoming high probability.

 Even a 2 min chart has not confirmed the gap up, this isn't anything I'm very concerned about as 2 and 3 min charts are very different from the probabilities of a 60 min leading positive chart, however near term they still suggest rising probabilities of at least a gap fill.

And here's the base overview, a large "W"-type (or Double bottom) base. At the "X" ther was no head fake move below support as we usually see. The orange area is the gap and that's the strongest evidence I have right now, an increasing chance of a gap fill. In that case I'll stick it out in UGAZ (3x long UNG) unless stronger evidence builds of something that may be worse than a gap fill, then I'd look at booking gains and re-entering at lower prices, but I believe with that 60 min positive in place, no matter what you chose to do, the probabilities are for a much higher UNG within the month.