This morning's up-gap open in the U.S. Natural Gas Fund ETF (UNG) could be a very significant, constructive signal after yesterday's new low, followed by an upside reversal from an extremely oversold condition.

So far, the less than 24-hour upmove in the UNG from an all-time new low at 5.20 to today's intraday high at 5.48 (+5.4%) has the "right look" of the conclusion of a bearish wedge pattern and the initiation of a new recovery uptrend period.

Of course, the UNG has very heavy lifting directly ahead if it is to provide technical confirmation of a significant upside reversal -- namely, continued strength that hurdles and sustains above 5.70 and then 6.05 for starters.

That said, any whiff of some unforeseen bullish fundamental factor, like a bigger than expected inventory drawdown, has the potential to terrify the entrenched short positions.

 

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