"Can you take a look at UNG/$natgas? I think we are in wave 5 down, possibly coming up on a 3 year low here very soon and wanted to see what your wave count would look like."
Well, my models indicate it is very near a bottom as well. The only question is "what does 'very near' mean". My first take on this was done in this post on UGAZ which provided the model below.
Obviously, I was off by at least 1 wave on this. But to make sure you understand how I came by this count, below is a zoomed out update. All I know is that wherever it bottoms, the price target for the bounce is $12. Note that the chart below is log scale and includes extended trade. Also note that this is now in free fall in a 5th wave.
You think this is going to continue forever? I think not. Free fall in 3rd wave = run away quickly but free fall in what is possibly a 5th wave means look for the vee bottom and then pile in big time. Remember GLNCY?
If this model is right, that lower blue line should be support. Also note that UGAZ is for trading, not holding. It bleeds value over time just like JNUG.
Having said that, below is the non log (i.e. linear) chart of UNG (not UGAZ) in order to get a different perspective. In this model it could be argued that black 5 is no where near the length of black 1 yet on the linear scale (even though it is approaching it on the log scale). I wish I knew which scale to use but I have not seen any regular pattern in this. Sometimes the log scale is more indicative and sometimes the linear scale is best. When in doubt, I choose the more conservative of the two while continuing to monitor both.
I think it is possible that $10 might provide some support since that is where the 5th wave down of the wave that began mid October would coincide with the 5th down from mid August and also at a nice psych support level. Maybe that will be "the" bottom and maybe it will only be 1 of 5 of 5. The only way to know is to buy that near term bottom and then look for a 3 wave retracement back up to $11.75. IF that happens, bail out and see if it will continue up or whether wave 3 of 5 down will play out.
Catching the exact bottom of anything requires patience and probably a few failed trade attempts. But you should only lose a couple percent on your stop if you are wrong and the coming bottom is a very intelligent place to make a speculative purchase. A break out of the top rail as pointed to by the red arrow/circle above would be the first indication that a reversal is in progress.
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