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Fan Yang

United States Natural Gas Fund (UNG) Looks Cheap Again

The United States Natural Gas Fund (UNG) has been trading sideways since 2016. Before that it was bearish. When looking at this period of sideways consolidation since 2016 we can see that price is now falling towards the range lows, where price could be considered cheap.

UNG Daily Chart

(click to enlarge)

Range, bearish bias:
- The daily chart shows that since 2016, price has settled in a range roughly between 5.80 and 9.50. 
- The latter part of 2016 saw a bullish attempt that failed, and price has since been meandering.
- In fact after the failed bullish attempt, there was been some bearish bias as price now trades under the 200- and 100-day simple moving average. Also, the RSI has been holding under 60 for the most part, which reflects maintenance of bearish momentum.
- The thing is, there is no strong bearish push towards the 5.80-6.00 support area. 
- Price is trading around 6.50 at the moment and I think there could still be some short-term downside. 
- But I think we should not expect further downside, and instead anticipate a bounce off of 6.00. 
- But because of the prevailing bearish bias, we should then anticipate resistance at 7.00. If price can bounce off of 6.00 and then push above 8.00, then, there is hope that UNG could be building a price bottom with the range since 2016.