UNG Natty Gas Daily Chart Positive Divergence

Keystone liked the long natty play with UNG in the 7's, thus, as the ole Wall Street adage goes for a position going the wrong way, he must love it in the 5's. The final drastic leg down was weakness in aluminum, fertilizer and other industries which are high consumers of natty. The mild winter has also added to plentiful gas supplies. Thus, more supply, lower price. Perhaps additional companies will cut back on drilling as in recent days which then will help to pinch supply and boost price.

Note the first bottom in mid-January. The UNG chart is very attractive on the long side with positive divergence in mid-December but, as Keystone mentions time to time, sometimes divergences are divergences until they aren't. In December and January the price collapse occurred and the lower lows with the indicators pointed towards continued pain. The red lines with the indicators show that another price low was needed to test the mid-December lows, those price lows occurred over the last couple days.

Look at the powerful positive divergence blue lines that launched price. This is a nice base forming now. Initial target is the gap between the neon green lines and also the confluence of the 20-day MA and horizontal support at 5.70, then 6.0 horizontal support. Projection is sideways to sideways up for the forseeable future. If long natty, pray for cold weather. Punxsutawney Phil must own natty futures since he saw his shadow today forecasting six more weeks of winter.  This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.