Shorts of Natural Gas ETF on Borrowed Time

The saga continues in the U.S. Natural Gas Fund ETF (NYSE: UNG) as the price structure perpetuates a profile of making marginal new all-time lows but fails to follow-through on the downside and then stages a recovery bounce.  The problem is that the recent rally attempts have failed to hurdle any meaningful resistance levels (such as 15.50), which leaves the UNG still stuck within its dominant downtrend despite its loss of downside momentum since late March.  Based purely on the developing bottoming pattern, “one of these days” very soon the UNG will rocket to 15.40/50, which will represent the first challenge of resistance – and the confrontation with the first line of shorts – which if hurdled should trigger a massive rally that could run the UNG to 18.00 to challenge the second line of entrenched shorts.  Whether or not today’s recovery rally is the start of such a traverse of the base (14.16 to 18.10) remains to be seen.  My work tells me the shorts are on borrowed time in the UNG.

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