Click on Chart to EnlargeI have held the UNG trade for some time, and the reason for this is that I truly feel this is a great contrarian buying opportunity, probably for even longer term investment positions.
As of the last couple months the smart money commercial hedgers are coming off of the largest long positioning in years (at least 6). And the large speculators are coming off an equally long term low. This looks great, but patience is in order for this to unwind.
The weekly chart looks set to make a bullish cross on the MACD at a higher low, meaning a likely long term trend change from a technical perspective. A simple projection up of the first leg of the bull market would put the chart above higher than $8.0.
This is in the context following a major bear market. The continuous futures chart above shows about 80% decline in just over a year. So the bigger the bear, typically the bigger the bull. That is a historically proven axiom of markets.
The US dollar looked similar last fall. And also the grains look similar now, but maybe not as bullish. The wheat market definitely looks very bullish based on contrary data and severity of the bear market in wheat.
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