Natural Gas Futures vs $UNG

In response to an earlier tweet where I said " $UNG doesn't correlate well bc of how contract rolls. Look at these but their charts are mess $APC $DVN $EOG $SWN $RRC" 


Correlation was a poor choice of words and mislead some readers. What I meant or should have said is that Contango (higher prices for longer-dated futures contracts) destroys UNG value as it rolls from a lower-priced maturing contract into the next longer-term higher priced contract. Thus returns are not correlated. 


Best of Trading 

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Is It Finally Time for Natural Gas to Shine?

I've Pulled The Trigger and

Bought Natural Gas Today...

I've had Natural Gas on my watch list for quite some time. With the seasonal trend up beginning on September 2nd (not shown) and the fact that the Commercials are adding to their long positions, I've been waiting for the completion of w.e of the triangle within w.Y. I am viewing the slight break of the lower boundary of the triangle as a throw over. Any subsequent break of w.c (3.39) would negate the triangle interpretation and my bullish view.

At the daily chart level, from the 3.85 low, I was looking for a five wave advance to confirm the weekly interpretation. If correct, price should thrust from the w.e low. Two sets of technicals are supportive of my analysis. The MACD shows divergence as prices made new lows and the RSI broke through 50-60 levels on the rally to 4.02 signaling that the rise was most likely not a counter trend move.

Subsequent price action is in a three wave zig-zag and the market has found support at the .618 retracement  of w.i. I level.

Trading the futures in Natural Gas is too my for my blood so I prefer using the ETF, ticker symbol UNG .

As to properly disclose to my readers, THIS IS A REAL TRADE, NOT SIMULATED! I will be adding ticker symbol UNG to my trade disclosure. You can locate that disclosure about 3/4 of the way down on the left hand margin of the site.

I've indicated my entry which front ran larger orders at 9.93 and the figure where w.(c) = w.(a) of 9.84 which is a reasonable entry level. Risk on the trade is minimal (.24) per 100 shrs. I'll be watching how price reacts off 9.84, unless the structure of w.ii is already completed. My target is a challenge of the 10.14 with much higher potential.

Should price decline from 10.14 and in a five wave move, the analysis is flawed and so is the trade. As such, from a risk management view, I'd be looking to cover on the next three wave rally up.

If you are interested in following the trade, I'll be making regular comments to this post.

Let's see if I can make some coin.

Best of Trading

As always, following this trade is strictly for educational purposes! Please familiarize yourself with the Risk Disclaimer and Disclosure Statements make within this blog site.