ETF Market Trends: Shorting Natural Gas ETF (UNG)
Written by Lawrence on September 18, 2009
Recently, we had a request for analyzing UNG, the ETF for trading natural gas contracts on NYMEX. To cut the chase, UNG is a good candidate for a short entry. Since peaking at about $60 last July, the ETF has been trending downwards with hardly any respite. A brief moment of bullishness appeared in September when it surged upwards to $12 from an all-time low of $9.
However, going forward, the outlook seems bleak. On Thursday, UNG hit a high of $12 intraday and then closed sharply lower. The $12 level is the immediate resistance level for the etf. In addition, the 61% Fibonacci retracement level in the most recent period of decline which began in early Aug coincides with the $12 level. The 50-day moving average (SMA) is also currently hovering at $12 and will serve as an additional point of resistance. Also of worthy note, the price pattern of the past two sessions produced a “dark cloud cover” for UNG – a Japanese candlestick pattern which signifies near term bearishness.
Going forward, traders will likely be looking for a short entry into UNG. One can initiate a short position at the current price (~11.30-11.50) and place a stop loss above the 50-day SMA. Profit can be taken (e.g. covering shorts) near $10. Go hit them!
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- This Week in ETFs: September 18th Edition | ETF Database 09-18-2009 at 3:47 pm
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Here’s my take on KPPC: KPPC has had a decent rally from its Feb 2009 lows, but... (Nov 22, 09)
09-19-2009
2:58 am
Lawrence
We do not have positions in UNG. It is still looking good as a short candidate even after moving up more than 3% yesterday. As long as it doesn’t close above $12, UNG remains a good short.
BTW, do check out our previous posts and see if they are of any good to you. Chances are, you would like made some good money if you’ve followed our set-ups.
Cheers!
09-18-2009
10:52 pm
kds8mln
You forgot to mention your positions or your allies’ positions at UNG so I can see if you are biased or not; also you past record at trading if you are qualified or not.