Trading commodity ETFs can be a very fun and profitable experience when done correctly. The first things I always analyze are the longer time frame charts. This allows me to see past support and resistance levels and determine whether the investment is trending up, down or sideways.
Let’s take a look at crude oil and natural gas.
USO Fund – Weekly Chart
The USO fund continues to look bullish as it consolidates the breakout with volume getting lighter. We could see a bounce this week and if we do I will be watching for a low risk entry setup.
UNG Fund – Weekly Chart
UNG continues to trend down and under perform the market. The last time UNG dropped to this level we had a nice bounce generating a 30% move in 3 weeks. But I don’t think that will happen this time. The price has been sliding lower slowly on light volume. This type of price action is not as predictable when compared to others. I will wait for a proper setup before buying an oversold bounce or shorting after a bounce.
Commodity ETF Trading Conclusion:
The weekly charts don’t lie. Trade with the underlying weekly trend and you will put the odds in your favor. I use the daily chart and 30 minute intraday charts for timing my trades as those time frames have proven to be very accurate with commodity ETF investments.
WE continue to be hold our golden rocket stocks and GLD fund. If the market co operates this week we could get some trading signals for both Canadian and US ETF funds.
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