I have been watching the Natural Gas ETF (UNG) as a potential trading vehicle for about a year. My attention is focused on the long side, but opportunities of that nature have been limited. There was a rally of +65% last summer, but that reversed in August, going into a new low in December. With the new administration being extremely hostile to fossil fuels, the potential for reduced supply is giving UNG a boost.
Technically speaking, a promising triple bottom has executed into a breakout. Note the prescient positive divergences on OBV and the PMO, formed as UNG was making its new low in December. Another interesting feature of this chart is the longer-term potential double bottom between the June and December lows. We need to view this in broader context.
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Looking at a weekly chart, I'd say that the June/December double bottom is very promising. The price pattern is well-formed, and the weekly PMO has formed a positive divergence and is rising.
CONCLUSION: The fundamentals and the technicals are currently aligned nicely in favor of an extended rally in UNG. Please note that this is an opinion, not a recommendation.
Technical Analysis is a windsock, not a crystal ball.
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