Stock Chart UNG

Stock Chart UNG

United States Natural Gas Fund, LP(Public, NYSE:UNG)

UNG has been the hottest ticket on stocktwits the past few days as volume has surged and it attempts to bottom out. While many traders are optimistic about UNG forming a bottom here, there isn't any evidence yet that says UNG is done going lower. The chart for UNG over the past year shows just about the steadiest downtrend you will ever see. I am posting a chart using multiple moving averages, which tends to paint a very clear picture of a trend. Notice how the moving averages maintained their trajectory and spacing all the way lower. They are now entering a congestion zone, as the ETF attempts to rally for the first time since the downtrend began in mid 2008. While I've been optimistic that UNG "may" form a low here, I am not commiting any capital until I see more evidence that the downtrend is over.
In order to remain objective, I will often turn to tools available in Market Club to look at how they are classifying a trend, and currently UNG is still solidly in the red. UNG is also still in a monthly sell trading triangle according to the propietary system.


I posted the chart for the United States Oil Fund LP (ETF)(Public, NYSE:USO) in order to show what may become of UNG if it can turn things around. USO was in a similar pattern to UNG for most of the past several months, correcting severely from last years record high oil peak. It also entered a congestion period with several whipsaws, until it finally began to trend in April. The moving averages are now starting to separate from the congestion zone and fan out into a smooth uptrend. This is a clear indication that the trend is rising and may persist for some time.

While I don't trade specifically around the multiple moving averages, I do use them often in order to step back and objectively assess the overall trend. In looking at UNG, near term there are some positive signals of a turn around, but the MMA chart is warning me that the coast is not clear.

Good Trading,


Joey

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