Friday, July 22, 2016

Crude Oil (USO) and Natural Gas (UNG): Signs Of Optimism?

Crude Oil ETF USO is in a down trend which I'm not going to argue about, however right now it appears to be poised to put in a wave 3 after getting caught in a descending wedge pattern. I expect from there that the decline will continue followed by a possible reversal and a continuation of the larger uptrend that began back in February, but a pop in oil looks like a strong possibility. Alternatively, a short could be entered if it breaks $10.30 as the EMA's are bearishly aligned at the moment.
Concomitant with crude oil at the moment is Natural Gas ETF UNG which has been grinding lower for a few weeks now and appears to be putting in the handle of my proposed cup-and-handle pattern. I'll admit I'm not very good at spotting these but I like how things are aligned at the moment, particularly as we are entering air conditioning season in the U.S. For a trigger I'm going to use the upper resistance line of the handle pattern around $8.00. The EMA's have not yet crossed over bearishly and I am anticipating a bounce once they meet.