Thursday, October 23, 2014

Flippity Flop: Natural Gas (UNG)

It seems ironic that just yesterday on my "Shits n'Giggles" articles I was extolling the virtues and perceived strength of natural gas. Wow, was I wrong! I did ask that you tread carefully with it lest it break-down as that is exactly what happened this morning. There was an open below the long term support on both the daily and weekly charts which means lower prices are on the way. I had a 'stop' set right at support and was closed out - I have now moved into DGAZ, a triple leveraged bear fund. The troubling thing for me is seeing UNG falling even further while currently resting at it's lower support line in the smaller declining red channel. This has a hint of also breaking down as so many commodities have (I mentioned this yeterday). The descending channels break down and give way to even faster declining channels. This appears to be happening on the daily chart, but what worries me is where do I see a bottom if I'm right? If we are entering the faster-phase of the decline this could break through support at $18.80. Prices could go down to $17.00 and $14.50 thereafter! I laughed when a blog that I frequently read projected DGAZ going $9.36 which would mean a 100% increase in share price. That scenario now actually seems possible and mechanics of such a move have been setup.

UNG: Natural Gas Daily Period
UNG: Natural Gas Weekly Period