Exhausted market or delayed response for natural gas ETF?
An interesting situation is developing in the United States Natural Gas Fund (AMEX: UNG, Bullboard) because the price structure pressed from last week's failed highs in and around $56.30 right to a test of the March- May support line at $53.00, which thus far has contained any further weakness. HOWEVER, let's notice that each time prices neared the channel support line, they reversed to the upside SHARPLY- to start a new upleg. So far, THIS TOUCH OF THE SUPPORT LINE HAS ELICITED A VERY MODERATE UPSIDE RESPONSE SO FAR, which could be indicative of an exhausted market, or a just a delayed response. Put it this way: If I was UNG bull, I would be very concerned about the sluggish reaction after hitting a three month up trendline. In any case, key near term resistance hovers at $53.80 to $54.20, which, if hurdled, should trigger additional strength that just might fit the profile of prior upside reversals within the channel. Conversely, a break of $53.00 will be problematic for the bulls, and should trigger long side liquidation that presses the UNG to $52.00 very quickly.
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