The bottom-building processing in natural gas and its related ETFs continues, these ETFs including the U.S. Natural Gas Fund ETF (UNG) and ProShares Ultra DJ UBS Natural Gas ETF (BOIL).

The BOIL pattern begins to round to the upside towards a confrontation with its Jan-Feb resistance line, now at 13.95, which if hurdled and sustained should trigger upside follow-through directly to test the prior rally peak at 14.55 (hit on Feb 7).

Right now, my near- and intermediate-term work argue strongly for upside continuation and acceleration. That said, the patterns and anecdotal evidence are potentially so bullish that I am expecting the next up-leg to be accompanied by a fundamental catalyst that is so compelling from the long side -- and such a game-changer for the shorts -- that the latter group has to cover and perhaps reverse its polarity.

What exactly that catalyst might be, I real have no idea. I only mention it because the technical set-up looks ripe for such a move. Let's keep in mind that this is an election year, with oil and gasoline prices marching skyward, which means nothing should surprise us, right?

By Mike Paulenoff

Mike Paulenoff is author of MPTrader.com (www.mptrader.com), a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.

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