UNG Nat Gas Update

The EIA Nat gas report was out today and despite an unseasonably warm start to the cold Fall/winter season, things are definitely picking up to unseasonably colder, Natural Gas supplies though, as revealed today in EAI's natural gas report only saw a draw of -111mm bcf vs last week's fall of -160, even with the draw, supply is above the 5 year average.

I think as posted on the 10th and yesterday that there was a head fake stop hunt in UNG below $14 and we are technically at a bullish ascending triangle which would suggest an upside breakout, the longer term charts are there as support, but looking at some of the shorter term NG futures charts, UNG like USO, also looks like a stop run first is a higher probability, as well as a better entry, less risk and stronger timing, although from a broader perspective, I have no problem holding UNG here.

 Daily UNG 3C chart with the stop run (yellow) and a positive divergence at the head fake/stop run

It's for this reason and charts like this that I don't mind holding UNG long here, but I suspect for new or add to positions there's probably a slightly better entry.

 While not textbook, on this 60 min chart the form of an ascending (bullish) triangle can be trraced out, the naural stop run would be below lower support, also at the psychological whole number of $14.

Today's churning bars with long upper wicks (60 kin) on heavier than normal volume suggest near term churning and a likely pullback, $14 or below would be ideal for letting the trade come to you with a better price point and lower risk.

 Long term charts look great for UNG like this 60 min which is why I wouldn't mind holding UNG long here and now.

The intermediate 10 min chart is the same.

At the 5 min chart we get our first taste of a negative divergence recently that looks like a pullback below the $14 level.

Futures charts don't have the same history on TOS, so their timeframes don't mean the same as the ones above, but in looking at them, it seems a pullback below $14 is probably likely and the sweet spot for new UNG long or add to positions.

 The 30  min natural gas futures chart suggests a pullback as do the 15, 10 min and others.

 This 7 min chart is near term so it would seem like if it were going to happen it wouldn't take long to start.

Again the longer term UNG charts are heavily biased to the upside, but that doesn't mean a near term pullback is out of the question, in fact they are usually hand in hand.

So I'm setting alerts for UNG< $14, that's where I think it has the highest probability set-up and the trade comes to you on your terms and has to prove itself first before any entries.