UNG is showing signs of reversing a down trend to up trend. Technically & fundamentally (economy perspective) this Natural Gas ETF is due for a long term up trend. I summarise my Technical Analysis and Fundamental Analysis as below:
Fundamental Analysis (Economic Perspective)
- Economy has started to recover. The demand of natural gas will increase due to increasing economy activities like manufacturing, transportation likes car and truck, cold winter, etc.
- Natural gas is another sort of popular green energy to be used widely in future where the world is determine to cut emissions of greenhouse gases.
- Natural gas will be part of the energy substitution to petrol for all the car users.
- Due to the low economy activities during the recession, natural gas is over supply and thus, there is no more natural gas storage space left. The major gas producers are now being forced to cut production; a move which may actually be beneficial to the industry as a whole as it will likely help boost prices, thus restoring margins for many producers.
Technical Analysis (Base on Chart Patterns)
- A double bottom (or inverted head and shoulders) has been formed.
- UNG broke out from the falling wedge resistance with increase in trading volume.
Things to look out for
- The falling wedge resistance turns support, i.e. the stock price does not return to the falling wedge.
- UNG breaks the $12.25 resistance (61.8% Fibonacci Retracement Level). This level is also probably the 200D MA if I extrapolate the 200D MA line.
- The next lower low does not happen below $8.50 (historial low!)
- 20D crosses over 50D MA.