UNG dominated by bulls lifting the market higher throughout the day
United States Natural Gas (UNG) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
UNG ended the week 3.1% higher at 11.64 after edging higher $0.10 (0.87%) today on low volume ahead of tomorrow's Memorial Day market holiday. The bulls were in full control today, moving the market higher throughout the whole session. Closing above Thursday's high at 11.58, the ETF confirmed its breakout through the prior session high after trading up to $0.16 above it intraday.
Daily Candlestick Chart (UNG as at May 22, 2020):
Friday's trading range has been $0.36 (3.16%), that's far below the last trading month's daily average range of $0.56. 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 UNG.
Regardless of a weak opening the market managed to close above the previous 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 11.21 (S1). Prices are trading close to the key technical resistance level at 12.08 (R1). After having been unable to move lower than 11.31 in the prior session, UNG found buyers again around the same price level today at 11.38. The last time this happened on May 15th, UNG gained 7.17% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Selling could accelerate should prices move below the nearby swing low at 11.31 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. Although it is usually interpreted as bullish, it has actually shown to be bearish for UNG. Out of 86 times, UNG closed lower 56.98% 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 68.60% with an average market move of -2.32%.