UNG / UGAZ Follow Up

Since we're at a critical area, an attractive area and since so many of you are following this one, here's a quick update from yesterday's UNG / UGAZ Update.

 This 2 min chart shows a positive divegrence at a price formation we were just talking about yesterday, a "W" bottom which is on a small scale here, not a true double bottom which is a much larger formation, but the concept is exactly the same. Technical Analysis books have taught for decades that the second low in to a double bottom (or a "W" bottom as the concept is fractal and works the same in different timeframes) should fall short of the previous low. However since technical analysis became so popular as the Internet allowed for cheap online brokers and people needed a way to make investing decisions, Wall Street has used that popularity and the dogma that has stuck for nearly a century in many cases, against technical traders. Beleive it or not, at one time Technical Analysis as described in some of the Bibles of Technical trading, worked like a charm, but it was also not mainstream. I can remember people calling it "Voodoo Analysis " and mocking it with questions like, "How can a line on a chart tell you anything about what a stock will do?"

The point is, since its rise to popularity with online brokers, it is used against technical traders as they'll put a stop just below the former low or the first low in a double bottom and Wall Street will almost ALWAYS run price below that first bottom in a "W" or double bottom just to hit those stops and sake those traders out of the trade, at the same time allowing Wall St. to pick up the shares on the cheap an d in supply as a lot of stops are taken out creating supply which you need when trading in the size they do.

So yesterday's mention of a "W" bottom is nicely timed with one in UNG that did in fact run the stops below the low of the 4th right at the yellow arrow. Note it doesn't need to be a collapse in price, it just needs to hit the stops which traders often take way too literally by placing them at EXACT support.

In any case, the 3C trend through that "W" bottom that is forming looks great above.

This is one of the charts I posted yesterday and wanted to see near term improvement which we have seen with a new leading positive high as the second bottom in the "W" formation was made, likely 3C moved so much because stops under the 4th's lows were accumulated as they were hit.

 Interestingly, even the 15 min chart which typically doesn't move that fast in leading positive moves, is posting a new leading positive high for the price pattern and likely bottom.

Even a 30 min chart which had been perfectly in line confirming price (green arrows) is leading positive, an impressive move for a 30 min chart in such short time.

The intraday 1 min looks like it could pullback intraday which may be useful if you are looking to buy some weakness.

However I don't see the same in Nat Gas futures intraday, so far they are still in line.

I also wanted to point out the "W" pattern on the longer NG futures charts as well...

 The yellow trend line represents the stop run BELOW the formed low of a "W" pattern,  this is exactly the same thing as you'll see in a large or major Double Bottom or even a Double Top which will see the second high surpass the former high, causing traders who are short to stop out and often go long on a head fake move as the Double top or Double bottom are still legitimate price formations, it's just the short term head fake moves allow them to knock traders out, allow them to take their shares in size at better prices and create momentum bull and bear traps.

Also note the positive divegrence (like the 15 min chart) at the same area on a 60 min chart, again leading positive ...

So this bottom/base area for UNG/UGAZ / Natural Gas looks very interesting, I'm still keeping the UGAZ long position open.