The lower-than-expected build in natural-gas inventories (28 bcf vs. expected 37 bcf) in Thursday's weekly storage report goosed the price of the natural-gas futures.
Our technical work anticipated the move and we still see continued upside for the futures as well as for the natural gas ETN UGAZ.
The positive juxtaposition of our nearer-term momentum gauges with the sideways price action on the natural-gas. chart (July contract) was one of the indicators we used, which you can see on the chart below from August 8.
We actually added a long trade in UGAZ back on August 2, when the futures clawed their way above important resistance at 2.835, which corresponded to a price of 11.07 in UGAZ.
As we now know, natural gas rocketed on Thursday above the July 31 unfilled down-gap area at 2.89-2.92, toward a challenge of the next significant resistance zone at 2.97-3.00.
Targets
If hurdled and sustained, this will trigger the potential for a run at multi-month resistance at 3.10-3.11.
UGAZ has already exceeded our initial target of 12.40 and is up over 15% since we added it. Our next target is 13.25.
