Regardless of all the concerns around fracking, Natural Gas is a commodity that will continue to be tapped into and utilized here in the states. Given the fairly new found plethora of Natural Gas supply we have underground in the US, prices are much lower than the $14 they reached around this time in 2008. That said, anytime Natural Gas futures get down to the $4.00 level we take notice.
Highlighted in the chart below is S1 (primary support) in Natty @ 4.15 and S2 (secondary support) at 4.00. At this S1 level, we tend to consider a trade.
UNG is the vehicle we most often use when trading Natural Gas anything longer than intraday (if it’s an intraday trade, we use the futures). In the chart below, note the consolidation support here in UNG.
With both charts in mind, a bullish position here makes sense. Nothing too big yet, but a little here and an add if Natty prints 4.00.
We favor the Aug 10/11 Bull Call Spread, and just might sneak in a few before the bell.