/NG (UNG) – Move Lower Taking Shape…

First and foremost, the Federal Reserve will be holding its two day policy meeting this week which will conclude on Wednesday. This will be the first meeting with Jerome Powell as Chairman and it is expected that a rate hike of 25 basis points will be announced. A new Fed Chair and a new path for Fed funds rates brings uncertainty to the market. Markets do not like uncertainty, so trade with caution, even ahead of Wednesday’s announcement.

Currently, the ShadowTraderPro Swing Trader Model Portfolio is short natural gas via short UNG. The reasoning for our position is illustrated on the chart of natural gas futures (/NG) below.

The blue lines illustrate the bear flag pattern that has formed on the daily chart of /NG. Last Thursday, price broke down from the flag. On Friday, /NG closed within the lower half of Thursday’s range.

We think there is still plenty of meat on the bone for those looking to participate. An undercut of last Thursday’s low would serve as an excellent short entry point as it will bring more attention from the market to the probability that another leg lower, in /NG, is taking shape. UNG is available for those who would rather trade a natural gas ETF in lieu of the futures contract.

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