UNG – Return to the Falling Wedge

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UNG failed the breakout from the channel and returned to the falling wedge. $9.00 is a critical support level and if UNG bounces back from this support, a double bottom will be formed. If this support is broken, UNG will continue to go south to its historical low until the next support of $7.072. Formation of either a double bottom pattern or breakout from a falling wedge in a down trend will reverse a trend (i.e. the stock price will move up eventually). As I am planning to invest this ETF for long term, this analysis gives me some idea where I can accumulate more shares at a lower price.

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United States Natural Gas Fund (UNG)

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United States Natural Gas Fund (UNG) is an ETF to track the Natural Gas prices of Futures contract. Natural Gas is energy commodity and the price is influenced by the supply and demand condition. The ETF price has been beaten down 81% since its historical high of $63.48.

I am preparing to long the stocks as the economy will recover eventually and the energy consumption will increase in the long run. Furthermore, natural gas consumption will increase in the coming winter and this energy commodity price is expected to go up.

UNG is breaking out from its down trend channel and going to test $12.22 resistance level (61.8% Fibonacci Retracement). If it breaks and stay above the resistance turned support line, the stock price will probably be moving upward. The stock price is currently above its 20D & 50D MA support lines. If the stock price fails to break the resistance, it may move down to about $9.00 level.

UNG has just to trigger a “Parabolic Stop and Reverse” buy signal on the daily chart. MACD, RSI and Stochastic are very close to show bullish convergence.

My investment plan
Entry point = about $12. If the stock price fails to break the resistance and retrace back to $9.00, I will buy more and do a dollar cost averaging down.
Investment Time Frame =  1 to 3 years.

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