After breaking the monthly downtrend line, First Trust ISE Revere Natural Gas ($FCG) stalled out just above $20 and is now in basing mode. Note that the 10-month moving average (which is like a 200-day moving average) is clearly trending higher after six months of consolidation:



On the shorter-term daily chart below, we can see the basing action over the past few months. Currently, $FCG is attempting to hold support of the prior swing low in a "double bottom" type formation:



Usually when a stock or ETF is ready to move higher from a base, the 20-day exponential moving average is above the 50-day moving average, with both averages pointing higher. In this case, the chart pattern has a bit more work to do because the 20-day EMA is currently trading below the 50-day MA. As such, this swing trade setup is not yet actionable, but we will continue to monitor the price action for a low-risk buy entry.

Power Shares Golden Dragon China ($PGJ), which we recently highlighted as a strong Asian ETF, has been in base mode since mid-October, and is trying to hold the 50-day moving average. Wednesday's shakeout was ugly, but if the price action can return back above the 50-day MA within the next day or two, then the drop was just a bullish undercut:



We are placing $PGJ on today's watchlist for potential buy entry.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.