Never a dull moment in natural gas. The inventory build was a bit less than expected, but sellers came out of the woodwork above 8.05 in the U.S. Natural Gas Fund ETF (NYSE: UNG) and smacked prices down to 7.72 so far.

From a larger pattern perspective, however, all of the action off of the July 15 low at 7.23 to the August 2 high at 8.37 exhibits bullish form, which if accurate suggests strongly to me that after this "intervening" pullback runs its course, another powerful upleg should emerge that propels the UNG to 9.00/30.

The question is how much more selling pressure will occur prior to the anticipated upside reversal. Key near-term support resides between 7.67 and 7.50. If that zone is taken out, the likelihood of a total retracement of the July-August advance increases significantly.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.