Give It The Gas

I've got a long Idea for the Henry Hub Natural Gas ETF, UNG.

After rising in late-2024/early-2025, UNG fell again (Mar-Jun), but recently (significantly) crossed above the trendline from that down move.

Time to look for a long position. But UNG is volatile - to reduce risk it's best to pick it up after a minor pullback. That seems to be happening now.

One thing I find useful when looking at an ETF backed by a commodity is to look at the chart for the underlying commodity future.

To be clear, I am NOT trading the future, only looking to it for (more) guidance.

In this case, for UNG, I chose the Aug Henry Hub Natural Gas contract (NGQ2025), which TradingView provides 10-minute delayed date for;

Here we see the trendline (light blue) is even stronger (i.e., more points of contact). In addition, the contract made a series of slightly higher lows (yellow line) before breaking through strong resistance at ~3.82 (a level which may now be providing support). Trendline breaks alone can be very flighty - they often don't work - so it helps to have other supporting factors (e.g., higher lows preceding, strong resistance breaks). And, not shown here but useful, UNG/NG is not overbought on the daily chart.

Now one could take a long position here, with a stop below the trendline, but I prefer my knives to at least slow down before I catch them.

Looking at the 4-hour chart for a reversal to enter;

A reversal and close above 3.92 would give a good entry point (using UNG), with a tighter stop at ~3.7 (or ~16.25 on UNG).

This is a "work in progress", so the actual trigger levels may change a bit. Or the whole setup could invalidate itself if the instrument(s) corrects back to at/below the trendline.

For targets, natural gas has resistance at 19.1 and again at 24.0 - best to trail a stop as UNG's price rises, bringing it up as each zone is hit.

For the long position, I anticipate an ITM option ~90 days out. I'm doing this in a taxable account, and for tax purposes UNG issues a K-1 to shareholders. I can do without the hassle. Option holders do not receive K-1's* (unless assigned), making tax reporting more routine.

Time to step on the gas?

*To the best of my knowledge - if any tax experts here know otherwise please drop a comment.

My ideas here on TradingView are for educational purposes only. It is NOT trading advice. I often lose money and you would be a fool to follow me blindly.

TheUncertainTrader

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TheUncertainTrader