UNG trade ideas
The Price is Right for Natural GasFor detailed analysis, please see our blog post published on 8/10/14 and feel free to post a comment there: www.syncubate.com
As can be seen from the daily chart, UNG has fallen from just over $26 a share near the end of June to just under $22 a share at the close of trading on Friday. From the high point of this trending move lower, UNG has had a nearly 20% drop in price.
The ADX line has since topped out and is dropping on the daily time frame, indicating that the trending move lower may have abated for the time being. This is further confirmed by the recent spike of +DMI above -DMI, as the bulls begin to stand their ground.
The MACD has also crossed above the signal line, which is another sign that a push higher in price by the bulls may be impending at this point.
UNG - Bullish Case for the Energy SectorUNG has been consolidating for a few weeks long, which is normal after an explosive move to the upside. He have made higher highs and as long as we stay above 24.29, we stay bullish. A bullish move in Natural gas will be positive for oil and gas companies, especially the ones that are more gas focused. Today was a good entry for UNG. there is also a double bottom on the weekly chart for UNG and hence my bullish thesis. Unfortunately there is not enough data to see how UNG reacted to Double bottoms. But this is the lowest low UNG has seen and im Bullish on this commodity.
Natural Gas Futures Roll And Weekly Reports Be Careful Of ContanI did this for my own reference.
The monthly rolls are approximate, do you own due diligence.
The weekly supply data comes out on thursdays at 9:30 EST
Trading View allows you to scroll into the future and project future events. Scottrade Elite does not.
Sierra Charts for a futures account allows you to do the same and has a very solid and easy to use platform.
When trading UNG, be aware of contango when the contract rolls into the next month. The current month NG contract can be at 4.422 and the next month at 4.622 and when rollover occurs the UNG price will be the same. Always be monitoring the current and next months contract spread because that is what you are giving away at rollover.
Read up on contango if you are trading UNG.
UNGUNG correlated to Natural Gas futures bearish move this morning has taken away gains from February 20th.
The sudden reversal will continue to play out providing an excellent opportunity to make an options play on this one. A simple Buy on the Put at $27 Strike at the opening bell would have up by +.66%. Target underlying price is $24.92.
The Historical Volatility is at 98% and the Current Implied Volatility is at 57%. Implied Volatility ranking is 51.60%. Under the rules of engagement with these volatility percentages, it is a "sell" signal going into the last "leg" of the March 14 (25) option chain. The Delta at $27 Strike is -.561.
HV being near 100% means there is high volatility giving us a directional move thus the underlying volatility will offset the time decay on the option premium.
UNG is currently down -5.60%.
I BOT a PUT at $27 Strike, 1.40 premium and one more PUT contract at $26, 1.17 premium. The $27 Strike chart shows a resistance at 1.88; but a "sweet spot" to come, looking at 2.72 to take profit before March expiration.
Very BULLISH on WEEKLY chartThe price just went above the Fib level, lets go for the next level around 31$
UNG needs a little higher before likely turning back downThis is a dual forecast. Looking at UNG from an elliott wave perspective, it is carving out a 3-wave corrective pattern higher. This lends a high probability that multi-year lows are not yet in. As a reminder, a five wave pattern is needed to signify a new bull trend. I can find no way to count five waves since the 2012 low.
To summarize, longer term (weeks to months), UNG should head back to the lows.
Near term (days to weeks), however, the C wave in progress is not yet complete until it completes 5 waves on the daily time frame. Right now it appears to be completing a wave 3 of C. The fibonacci projection of 26.43 is a high probability target where this corrective leg higher is proportional to the 2012-2013 rise.
Flat Base Breakout Trade Setup - EducationalFull Credit goes to Jake Bernstein. Jake is a Legendary Futures Trader who has done extensive historical back-testing. He's a best-selling author and Jake has published many of his best trade setups.
One of Jakes' most profitable setups is what he refers to as a "Flat Based Breakout".
Setup Specifics:
1. Typically find on a Daily or Weekly Chart.
2. Ideally You want to see a significant fall in price of the security your looking at.
3. The Longer price stays in the consolidation phase the better. This creates more buyers and sellers and/or shares traded in this area so when "The Break" occurs the traders who were "Short" have to cover creating a quick and significant move.
This is a Daily Chart of UNG (Note: Better Examples Below) which as you can see has fallen from 87.50 in 2010 to a Low of 14.25 in 2012. UNG has been in a Trading Range from 24.60 to roughly 16.60 for over a year now. This has created a lot of "Energy" that could create a significant move when the High of 24.09 is taken out.
On this chart I placed 3 Fib Retracements at major Swing Highs to the low of 14.25 (You can tell where I drew the Fibs from the top of the White Dashed Lines.
For Fib Values I use
0
.383
.50
.618
.786
1.0
1.272 (Extension)
1.618 (Extension)
To clean up the chart I took off all the lines that weren't in a "Confluence Area" of multiple Fib Levels. I find these "Confluence" areas are great Price Attractors. When price breaks above 24.09 the first 3 targets are shown by the White Ovals on the chart. Rough prices are Target 1 = 36.00, Target 2 = 42.50, Target 3 = 50.00 area.
I ran across this chart and wanted to Share the Setup so you can keep a lookout for it. After taking a look at a few charts others have shared on TradingView I quickly found several that I thought were better examples than UNG, However, this specific Trade Setup wasn't referenced.
Timwest Posted a Great chart of TSLA.
Look at the bottom left of the chart. Notice Consolidation area, then a Gap above, Test, then she stock took off.
JR Posted a Great example of symbol NBG
Notice the price action when you press the "Play" icon to fill in the last 2 months.
Can anyone find any current examples?
Nat Gas Weekly I know plenty of Nat Gas charts are out there with the recent surge, but I wanted to take a moment to look at the bigger picture. Most charts I've seen are focused on the daily action, so for those looking to establish longer term positions, this is one commodity that looks ripe for building positions.
I've provided a rough estimate of the likely price movement with the black arrows, but the main thing to note is the pop through the down trend line from 2011. It's already been basing quite nicely, and now it's above the 50 Week MA.
A gap is left at the $20.10 area, so that is likely to be filled in the near term. If it's tested and holds, that's a great place for an entry.
Bottom line, the risk is mainly to the upside with initial Fib targets between $25 - $32 and a 200 Week MA coinciding with those horizontal prices. Don't rush into this one.
Look into Call options on dips to support areas and even consider selling Out of the Money Puts to back into shares when prices hit support.
US Natural gas1st week of the month tends to be a good buying opp. for Nat gas.... I'm L calls $NG_F
