Oil has been enjoying a strong rally. I wrote about a possible bull flag forming on Oil in today's DecisionPoint Alert blog that you may want to review. Natural gas, on the other hand, has not had the advantages that Oil has had. However, it may be lighting back up with the new Price Momentum Oscillator (PMO) BUY signal.
As usual, when I review a stock, index or ETF, I look at the daily and weekly charts to discover short- and long-term support/resistance lines. You can see the PMO crossover BUY signal along with the rocketing SCTR and slightly rising OBV. At this point, we don't have a breakout from the declining tops trendline but given the positive indicators, look for it. The daily chart shows overhead resistance lying around $9.25 (the October low and January top) so that would be the best target.
The weekly chart is positive, but I think it is important to see a breakout above the 43-week EMA. The PMO is declining sharply which is bullish. This chart will go final on Friday. This is only a sneak peek so we could see that breakout by the end of tomorrow. If we don't, it is a week of caution ahead. Overhead resistance on the weekly chart is all the up to $15 on the very optimistic side and $10 (January high) as a more realistic resistance level.
Conclusion: Natural gas received a new PMO BUY signal to add to its already bullish indicator set. My caution would be that we haven't seen breakouts on either the daily or weekly charts yet. Additionally, low priced ETFs are highly volatile so be ready for big percentage changes most days.
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Technical Analysis is a windsock, not a crystal ball.
Happy Charting!
- Erin
