UNG Update

Over the last several UNG updates we have been looking at and for pullback areas, I still have the UGAZ (3x long UNG) position open and will keep it that way unless something materializes that warrants closing it as I'm more interested in the bigger picture than trying to trade around UNG, but that too can be done even with the simple ROC of price divergences I have shown in the last several updates for UNG.

 From left to right : At the yellow arrow the attempted breakout that we said on that day, "If it fails , UNG will head below the range and accumulate for the next breakout attempt"

It did fail, , just like a channel buster UNG moved quickly to the lower end and then below the range where it was accumulated (white box) and then as predicted broke out of the range. However we called pullbacks at both orange arrows, the first pullback at the white arrow and it looks like we are still building the pullback entry for the most recent pullback call (second orange arrow).

Volume is increasing on the day, if we get a bullish candlestick it will be very helpful and much more likely that UNG is near or done with its pullback.

 I have noticed a leading correlation with XLE/Energy in red, However correlation does not always imply causation. If it were a true correlation, then Energy as a sector would lead UNG as it seems to have, but again I can't prove this is anything more than random, I just thought you might want to see it and keep an eye on it.
 
 The UNG 3-day X-Over screen (for larger trends) has given a recent long signal at the white arrows proceeding a sell signal at the red arrows. Volatility around these initial signals is not uncommon.

 The macro 4 hour chart is still very strong, leading positive so I still like UNG/UGAZ long quite a bit as a macro trend.

The 2 hour chart shows the range we expected a large pullback from and got and the accumulation at that range on this more detailed 2 hour macro chart.

The 60 min showing more detail of the same , but also a smaller negative divegrence implying a strong pullback and I think the pullback area's size itself counts as "strong".

 In to the shorter term charts with more detail we can see accumulation/[positive divergences at the pullback lows, just like an institutional firm would fill their order, at the lows, hitting stops, etc.

The point is, I don't think there's anything wrong with UNG, it's just in an accumulation process , that's why they haven't let it follow through on the last 2 breakouts, they aren't done accumulating as their positions are much larger than ours and you also know I believe UNG has a good chance of entering its own secular bull market, especially now that the US shale oil industry is being destroyed by OPEC, nat gas will become an increasingly useful resource that the US has a lot of.

 1 min intraday, again showing accumulation at lows and negatives to push price back down.

I showed a way to use ROC on price to look for pullback areas and signs of pullbacks, this 30 min chart has called nearly every one.

I believe UNG probably needs a little more of a reversal process, but being under the range, it also could create a lot of upside momentum quickly. I have no problem keeping UGAZ long open so I really don't have a problem with UNG long positions in the area either, especially not for longer term traders.

If you're interested, I'd keep an eye on ROC of price and its divegrences. As I said, I think a decent reversal process that can support a breakout move needs a little wider (lateral base) footprint, but if the divergence starts screaming, I'd listen to it. I'll keep an eye on it as well.