Yesterday the United States Natural Gas ETF, trading under the symbol PACF:UNG, triggered a new weekly green continuation Trade Triangle at $25.44.
What is interesting about this market is the fact that it has broken above a two-year base, which I believe is very significant longer-term. With the recent pullback from the highs of $27.64, we actually stopped at the previous highs that were set in October 2012 and again in May 2013. Technically, this market looks very good and I am going to layout my case with simple numbers you can tie into the chart.
Looking at a chart of UNG, the most dominant features I see is the two-year base, (number 2) and a breakout over the two-year base (number 6).
1. Showing the positive monthly and weekly Trade Triangles.
2. Two-year base.
3. Top of the Fibonacci measurement point at 49.15.
4. Bottom of the Fibonacci measurement point at 14.35.
5. Major upward trend change at 19.98 on 12/5/13.
6. Major breakout over a two-year base.
7. Upside target zones of 30.40 and 31.75.
8. RSI Indicator at +56.87, which is bullish.
Not shown on the chart is the MACD indicator, which has turned positive indicating that this ETF is trending higher.
As with any trade, risk has to be taken into consideration and that is the job of money management. I am looking for this market to move up $5 or $6, perhaps more, so it doesn't make sense to have a $5 or $6 stop on this position. That would just be a 50-50 win-loss proposition. Depending on how you trade, you could use one of three common stop loss strategies, you can read about right here.
Here's to a very successful Natural Gas trading year to all our members, traders and friends,