the game plan/strategy is to BUY the first PATTERN in a “new” trend and if it works then probability is that the trend change is real …
Energy, Ags, etc. are exploding of late and GLOBAL shortages that are becoming apparent pretty much every day are REAL. so, if one thinks (trade what you see not what you think) that Nat Gas prices are due to continue to rise then we have UNG that will give you exposure.
if we break thru the low at 13 then I would consider this a failed pattern but we have some MAJOR support coming in/around 15 for the BUY to get long nat gas and, perhaps, hold this position for a LONG time …
it’s all probability folks …
below, you will see a MONTHLY on UNG since inception. wanted to post this chart so you could see why I wrote the above .. have we broken out in Nat Gas? have we begun a new bull trend? full disclosure, I’m long UNG down in the single digits and will be looking to ADD to my position at this pattern completing – if it ever does.
take note of the volume picking up and the fact that the RSI is at it’s highest level .. the key here, in the coming ongoing pullback, is where the RSI finds support … if we find support on the BULL ZONE (around 40ish) then we can start giving our change in trend some more probability … but, for now, we are speculating that a very investable low is in place .. don’t throw the farm at this one .. nibble at it … as we will see the breakout occur and there will be more time to get LONG if the “low in place” thesis is correct.
additionally, the “length of the base equals the price target potential is also nice here .. we’ve been basing for 6 years and, if you want to split hairs probably 10 years once that low was put in place 2012. bottom line, if this things goes higher, it’s going to go ….
another way to check trend is via long term LOG charts .. LOG’s help you understand rates of change and are very good at giving first hints of big changes in trends or inflections …in looking at this on the long term log scale, certainly appears to have broken the long term log trend line …
last, when you are building a position, it’s wise to see how “strong” or “weak” that security is compared to high fast flyers .. in this case, for no other reason than randomness, I chose UNG/NFLX.
yup, Natural Gas has out performed (on a relative strength basis) NFLX for all of 2020
I’ve had a couple people text me over the past couple days regarding Natural Gas and UNG.
well, right now UNG is definitely a dog and I went a little red today but I’m going to stay w/ this one because 1/ this is a LONG TERM play and 2/ I’ve been watching a SUPERB BUY pattern on the Natural Gas futures as shown below.
certainly looks like it wants to go down and tag that level … I’ll hold LONG UNG until that level is tagged. it DOES NOT need to go down there but it’s a valid pattern BUY ….until that level is taken out to the downside on a daily/weekly close I’ll remain my bullish outlook on Natural Gas.
will I add to my position w/in UNG if it goes down and tags that level … NOPE. as a pattern recognition investor/trader I have been taught to never add to a losing position. so, I’ll WAIT for it to become positive before ever thinking of adding anything and if it blows thru the BUY PATTERN to the downside then I’ll take a loss. that loss NEVER exceeds 3% of the total trading capital.
update: rolling into a BUY zone for both futures and UNG. IF the thesis that a BIG low is in place THEN we should find support and then continue upward.
take time to look at the long term Nat Gas Continuous Contract chart … you can see the “major” trend line which is acting like resistance .. a weekly open and close above that trendline could signal game on for the bulls.
if major support breaks then we could be looking at the 7 dollar level on UNG. needs to find support in the area shown …
if you search for Natural Gas on the blog, you’ll see for almost 3 years – yes 3 years, I’ve been flirting w/ a low (big low) on Nat Gas and looking for the pop … back in 2017 we ID’d a pop but it quickly got run over. Wrong …and, since then, I’ve really just dropped it off my radar.
two of my really good virtual (unfortunately) friends from the Academy, Rugby, flying and blah blah and me trade texts back and forth. they act all smart like they are finance guys about the news and the P&E (did I spell that right) and fundamentals .. I just look at PATTERNS.
they asked about Nat Gas. “Great,” I thought “I can go back and visit my old nemesis. and, I would be an idiot to forget what now President Biden said about energy, right? One would think it would be falling out of the sky. EXACT opposite.
I believe it made a VERY big low in July, it just finished a 5 wave move up from an “ending diagonal” and we have 5 ratio’s (retracements, extensions, measured moves, projections) all coming in at 2.2.
I do want you take note of the yellow area at the left of the screen .. on a daily, this area looks like an expanded flat. however, when you drill down to a lower time frame (here a 4 hour) it sure looks like I’m curve fitting – which I might be, just being honest. I’m putting a bias into the fact that I’m right on the thesis: BIG LOW. that changes things somewhat because wave 4 CANNOT go below the end of wave 1 (or above if going down). sometimes you can dirty your purist mindset and maybe go w/ a CLOSE below 1 and if there is a daily wick or two right around the end of 1 you can curve fit and the count continues. folks, in this case 4 was below for almost 10 days … that’s a broken rule and an invalid count. see how fun Elliott Wave can be …?
one last, if you look at where the “PATTERN BUY” level is at that 2.1-2.2 zone one will see that the PATTERN completely closes the gap left on the 4 hour chart … nice.
If you look at UNG, it hasn’t budged so if your going to play the ETF/Fund side of the house, I would recommend that you wait to BUY until Nat Gas hits 2.2 on the continuous futures contract.