June 2, 2009 - HNU.TO Consideration

Natural gas is one of those commodities that has taken a massive beating over the past year. I've been following the ETF that tracks Natural Gas on the TSX: ticker HNU.TO

With the current changes in the market and the return of cautious optimism to investors I am looking to get into Nat Gas. There are fundamental reasons why the price of Nat Gas doesn't make much sense below $7, but I am not about to go over the fundamentals here. All information is reflected in the price action. Let's take a look:



Above is the chart of HNU.TO drawn with a 200day (red) and 50day (blue) SMA. I've drawn the lowers trend channel for the downtrend, and the 50day SMA has served as a very effective ceiling to the downtrend. However, in the recent days, we have seen a test of the 50day MA which failed, BUT here we are going for a retest. Given the recent volume, it shows many have returned to trading this ETF.

The RSI is near 50, which does not indicate an over-bought position. MACD has been trending higher for a while in a tight range.

I am looking at this for a long term trade as comodities usually set up long-term runs when the trend changes. I will look to build a small position here, and add near the $6.50 line.