Natural Gas (UNG) Analysis Request - Heating Up?


I've begun taking symbol requests prior to my Wednesday and Friday webinars. Viewers are treated to a DecisionPoint viewpoint on their favorite symbols. This is an excellent opportunity to understand how to look at a chart and find what you need to in order to make an educated investment decision. While DP analysis and indicators aren't always right, but like Blackjack, you improve your odds considerably simply by knowing and applying the basic rules. 

My viewer wrote to me:

"UNG is looking interesting at least short term with a target price of 9.40 to 9.60 area. PMO increasing and about to possibly cross zero line. Broken above all moving averages. SCTR & on balance volume improving."

The email arrived this morning before the spectacular move and close. Good catch, my friend! However, there are negatives here in addition to the positives. The DecisionPoint Trend Models are based on 5/20/50/200-EMA crossovers. Currently those models are simply unhelpful. When the EMAs braid and thin their margins among each other, those crossovers can easily become whipsaw signals. Currently, the 50-EMA is above the 200-EMA which technically puts UNG in a bull market configuration but the margin between the two is .01. The SCTR was improving but until I see a reading above the January top, I don't think it is giving us bullish information just yet. The best parts of this chart are the rising Price Momentum Oscillator (PMO) which will likely trigger a BUY signal soon and the breakout from the short-term symmetrical triangle. Those patterns are typically continuation patterns and really called for a breakdown to continue the fall from the December high, but instead it broke out. It's reached resistance at $8.75, but the OBV is confirming the breakout with a reading above the previous top.

More information can be gained looking at the weekly chart. The PMO is not quite as bullish on the weekly chart. It so far has been avoiding a SELL signal which is bullish and it is rising. $9.50 looks like a reasonable target price, but a strong rally could propel UNG to the $12. Indicators aren't quite bullish enough to call for that; for example, the 17-week EMA is still below the 43-week EMA.

Conclusion: To my reader and viewer: You analyzed the chart well. I think a target price to the top of the price channel denoted on the weekly chart around $9.50 is a good one. There is potential for more, but given the somewhat mixed indicator information, I think that $9.50 is sensible. 

The NEW DecisionPoint LIVE public ChartList has launched! Click on the link and you'll find webinar charts annotated just before the program. Additional "chart spotlights" will be included at the top of the list. Be sure and bookmark it!

Come check out the DecisionPoint Report with Erin Heim on Wednesdays and Fridays at 7:00p EST, a fast-paced 30-minute review of the current markets mid-week and week-end. The archives and registration links are on the Homepage under “Webinars”.

Technical Analysis is a windsock, not a crystal ball.

Happy Charting!
- Erin

Erin Swenlin
About the author: is a co-founder of the website along with her father, Carl Swenlin. She launched the DecisionPoint daily blog in 2009 alongside Carl and now serves as a consulting technical analyst and blog contributor at Erin is an active Member of the CMT Association. She holds a Master's degree in Information Resource Management from the Air Force Institute of Technology as well as a Bachelor's degree in Mathematics from the University of Southern California. Learn More
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