Natural gas sees bullish technical setup, but resistance looms

September 16, 2013 06:17 AM
Daily Market Analysis for Monday, 09/16/2013


OVB      Outside Vertical Bar
VRCB   Volatility Reduced Compression Bar


Brent Crude Oil (November ‘13):

  • Short Term Trend is bearish.
  • Confirmation of a top with a range violation on 09/09/2013 @ 113.31. Confirmation of a top with a close violation on 09/09/2013 @ 112.33. Downside Targets = 109.65 – 108.36.
  • Possible partial confirmation of a bottom with a range violation @ 112.18. Possible confirmation of a bottom with a close violation @ 112.18 or higher.
    • November Brent Crude dropped sharply lower throughout the first two trading days of the session this past week, breaching the $110 threshold and reversing the ST trend from bullish to bearish for the first time since early June.
    • While the market was able to slightly recover throughout the second half of the week, the price action and rate of change was still decisively bearish. Look for the market to try and make a slight move higher early in the week and likely fail once it threatens the $113 mark.
  • Projected Daily Range: 1.59
  • Projected Weekly Range: 5.79
  • Projected Monthly Range: 8.68

WTI Crude Oil (November ‘13): (NYMEX:CLX13)

  • Short Term Trend is bearish.
  • Confirmation of a bottom with a range violation on 09/12/2013 @ 108.96. Confirmation of a top with a close violation on 09/10/2013 @ 107.39. Downside Targets = 105.76 – 104.53.
  • Inside compression day generated on Friday.
    • November WTI Crude Oil followed Brent lower during the early goings of last week but managed the downturn much better as it closed the spread gap to within less than $4 and held the short term support trendline that has caught most of the bottoms dating back to late April.
    • Although WTI also generated a ST TREND REVERSAL to bearish, the breaking of the ST trend channel on a closing basis will be the more important directional indicator as to where the next $8-$10 will be made in this market.
  • Projected Daily Range: 1.61
  • Projected Weekly Range: 5.75
  • Projected Monthly Range: 10.28

Natural Gas (October ‘13): (NYMEX:NGV13)

  • Short Term Trend is bearish.
  • Confirmation of a bottom with a range violation on 08/12/2013 @ 3.327. Confirmation of a bottom with a close violation on 08/14/2013 @ 3.342. Upside Targets = 3.4613.534
    • October Natural Gas generated an inside VRCB week during last week’s trading activity as it slowly worked its way higher off the lows of the previous week.
    • Typically VRCB formations are observed a crucial pivot points in the market and are foretelling of injections of directional volatility.
      • Based on this past week’s price action it would appear that the market should be heading higher but given the significant resistance between $3.70 - $3.75 there exists an opportunity for a bearish outside week that could in turn confirm an IT top with a weekly settlement below $3.517.
  • Projected Daily Range: .095
  • Projected Weekly Range: .182
  • Projected Monthly Range: .497
About the Author

KMH is a trading and technical analysis firm that specializes in commodity futures and commodity based ETF’s. Kris Hicks has worked for numerous years in the commodity business and in 2011 accurately forecasted both $25 moves to the downside in May and July and the $25+ move to the upside in October in oil. He also called the all-time high day for gold on Sept. 6, 2011 and forecasted a projected downside target of 1528.10 in March 2012. He was also responsible for projecting the Q2 and Q4 low in the Euro FX to within 13 and 9 ticks, respectively.