A Weekly and Daily Chart View of UNG Natural Gas Oct 26

Oct 26, 2009: 11:51 AM CST

With the Natural Gas ETF UNG falling almost 5% before mid-day on Monday, October 26th, let’s take a quick look at the broader picture by seeing the structure and opportunities on the weekly and daily charts.

UNG Weekly:

The weekly chart is showing a lengthy Arc or  “rounded reversal” pattern that continues to drag out into the $10 per share level.

Volume has trailed off as price has found a consolidation range between $10 and $15 per share in addition to the positive momentum divergence we see underlying price.

The trend structure clearly is down, and price is underneath all key weekly moving averages, and I would suggest taking a special look at the 20 week EMA, which currently resides at $12.38 per share.  The 20 EMA has contained all price rallies so far like a brick wall.

Unless you’re an aggressive trader playing for a trend reversal, I wouldn’t touch UNG long for anything other than a day-trade until price can prove that it can sustain itself above the 20 week EMA for at least a few weeks.

UNG Daily:

On the daily chart, we see that price was recently unable to sustain a move above the daily 20 and 50 EMAs – which has been the pattern as seen on this chart.  We look at current characteristics of successful and failed patterns to understand the “Character” or “Behavior” of a stock or market.

In this case, buyers can push price slightly above these moving averages, but have never been able to sustain price above them for more than a few days.  As such, any move above the EMAs – particularly when dojis have formed – has been a sell-signal (almost mocking bulls and creating ‘Bull Traps”).

The black lines reflect adaptive trendlines from earlier in 2009.

If the prior trend continues, then we will be looking for a price move down to test $9.50 or $9.00 in the next few weeks – provided that the $12.00 level holds as it seems to be doing as resistance.

Thus, $12.00 is the line in the sand, and as long as price remains underneath this level, then odds seem to favor lower prices as a factor of the crushing downtrend in place.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

9 Comments

9 Responses to “A Weekly and Daily Chart View of UNG Natural Gas Oct 26”

  1. Dan de Man Says:

    Thanks Corey, I've been eyeing this trade too and I'm going to take a half position today of HND.to and add to it when my ADX breaks through 30. I hope we make it too the bottom.

    Cheers,
    Dan

  2. Corey Rosenbloom, CMT Says:

    Thanks Dan!

    I want to give you credit for being right in your calls/comments you've posted here on similar posts. Hats off to you! Always great to hear from you.

    It appears to be a good risk/reward trade – which is all we can ask. Trade looked better when price was faltering at $12 (tighter stop) but now that price seems on a pathway to $9.50, there doesn't seem to be any major technical support until we test the lows so unless something over-rides or unexpected happens, the chart hints that $9.50/$9.00 may be tested.

    Take care!

  3. pete Says:

    corey – your site is consistently good- enjoy reading your posts.

    p

  4. Corey Rosenbloom, CMT Says:

    Thanks Pete!

    Glad to have you as a reader.

  5. Dan de Man Says:

    Thank you Corey! Your site is amazing too. Your technical intellect is outstanding. There is always something great to read and learning off each other it very stimulating.

    Good luck in your trading and all the best.

    Dan

  6. Dan de Man Says:

    60 minute charts are turning bullish. I might have to reverse this position and day trade it if we have a short covering rally tomorrow.

  7. Dan de Man Says:

    60 minute charts are turning bullish. I might have to reverse this position and day trade it if we have a short covering rally tomorrow.

  8. UNG Natural Gas Update for November 7 | Afraid to Trade.com Blog Says:

    […] UNG Natural Gas Update for November 7 Nov 7, 2009: 10:34 PM CST // I wanted to do an update post on the infamous Natural Gas fund UNG, now that it has (almost) completed a test of the prior lows as mentioned in my prior post entitled, “A Weekly and Daily Chart View of UNG on October 28th.” […]

  9. UNG Natural Gas Update for November 7 | Penny Stock Trading System Blog Says:

    […] I wanted to do an update post on the infamous Natural Gas fund UNG, now that it has (almost) completed a test of the prior lows as mentioned in my prior post entitled, “A Weekly and Daily Chart View of UNG on October 28th.” […]