Volume Surge In UNG Natural Gas Fund

Might a recent volume surge in UNG (Natural Gas ETF) hint that higher prices are yet to come?  Let’s take a look at UNG’s long-term weekly structure and then step inside the ‘volume surge’ on the Daily Chart.

UNG (Natural Gas ETF) Weekly:

What’s most interesting is the sudden spike last week to over 200 million shares transacting in a single week - a record for this exchange traded fund.

It would certainly appear some fund (or group of funds) is ‘up to something’ perhaps through this ‘unnatural’ movement.

Price has been coming off a steep downtrend since the mid-2008 commodity peak which sent all commodities plunging to new lows into 2009.

Crude Oil has already completed its “Rounded Reversal” pattern with more room perhaps still to run but Natural Gas hasn’t been so lucky to rise as crude oil did.

Now might be the beginning of a potential multi-month rise… or at least we’re granted a potential low-risk opportunity if your analysis reveals as much.

Let’s step inside the volume surge on the daily chart.

UNG (US Natural Gas ETF) Daily:

Price formed a new low beneath $13 per share in late April, and price appears to be forming some sort of triangle consolidation off these lows.

Price level $13 seems to be holding strong support (offering an ideal location for a stop just beneath it) while we could be seeing a pure “Rounded Reversal” (trend reversal) taking place at these levels.

It’s quite unique to see volume surge with such consistency as we’re seeing in UNG above.

The 3/10 Momentum Oscillator registered a new high, which could hint that a price high is yet to come.

Price also broke recently above the 20 and 50 EMAs (only to fall back beneath them) which is a prerequisite for price to form a reversal into an uptrend.

Let’s keep watching Natural Gas and specifically UNG for any signs of strength or follow-through to the upside.

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Comment by DarrenA

2009-06-10 03:50:30

Great work Corey - as per usual. Makes you think!

What are your views on PMT/UN.TO. If Nat Gas will make a rise, I feel this would be a good play. It’s oversold at the moment, not as much as it was. 3.00 would have been a nice time to dip the toe in the water

thanks

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