UGAZ finds buyers again around 15.15
VelocityShares 3x Long Natural Gas (UGAZ) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
UGAZ finished the week 6.05% higher at 16.13 after edging higher $0.33 (2.09%) today ahead of tomorrow's Memorial Day market holiday. Closing above Thursday's high at 15.99, the market confirmed its breakout through the previous session high after trading up to $0.62 above it intraday.
Daily Candlestick Chart (UGAZ as at May 22, 2020):
Friday's trading range has been $1.46 (9.62%), that's far below the last trading month's daily average range of $3.03. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for UGAZ.
Even with a weak opening the ETF managed to close above the prior day's open and close, forming a bullish Engulfing Candle. Additionally, two candlestick patterns are matching today's price action, the Bullish Short Candle and the White Candle which are both known as bullish patterns.
Prices are trading close to the key technical support level at 14.88 (S1). After having been unable to move lower than 14.88 in the previous session, UGAZ found buyers again around the same price level today at 15.15. The last time this happened on May 11th, UGAZ actually lost -20.43% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Buying could accelerate should prices move above the nearby swing high at 19.98 where further buy stops might get triggered. Selling could speed up should prices move below the close-by swing low at 14.88 where further sell stops might get activated.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Engulfing Candle" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for UGAZ. Out of 59 times, UGAZ closed lower 55.93% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 62.71% with an average market move of -4.99%.