Oil weakness continues as $83 target comes into play

Daily Market Analysis (SHORT TERM) Tuesday 10/23/12


KEY TERMS

OVB       Outside Vertical Bar
VRCB    Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (December):

  • Short Term Trends are bullish.
  • Confirmation of a top with a range violation on 10/15/12 @ 112.92. Confirmation of a top with a close violation on 10/18/12 @ 112.42. Downside Targets = 110.86 – 109.36.
  • New lows made on current move Monday @ 109.17. Downside Targets over 110% achieved.
  • December Brent Crude dropped lowed on Monday during a second half day drop after being unable to sustain the early move back higher and it closed at its lowest level in 13 sessions.
  • Based on the price action in Brent, look for the current downward pressure to extend a bit further before finding support near the Intermediate Term price objectives of $106.50 – 107.18.
  • Projected Daily Range: 2.43
  • Projected Weekly Range: 5.35
  • Projected Monthly Range: 12.02

WTI Crude Oil (December):

  • Short Term Trends are bullish.
  • Confirmation of a top with a range violation on 10/22/12 @ 90.18. Confirmation of a top with a close violation on 10/19/12 @ 90.44. Downside Targets = 86.82 – 86.47
  • New lows made on current move Monday @ 88.57. Downside Target 75% achieved.
  • December WTI Crude Oil dropped to within less than $0.50 of the two-month lows from two weeks ago as it closed outside the daily Support Bollinger Band due to a slow and steady fall throughout the trading session.
  • Because of the overall weakness in WTI as compared to Brent, look for WTI to generate new three-month lows this week as it trades toward not only the Short-Term objectives near $86 but the Intermediate-Term support area at $82.95.
  • Projected Daily Range: 2.62
  • Projected Weekly Range: 4.93
  • Projected Monthly Range: 11.33

Natural Gas (November):

  • Short Term Trend is bullish.
  • Confirmation of a bottom with a range violation on 10/19/2012 @ 3.592. Confirmation of a bottom with a close violation on 10/19/2012 @ 3.617. Upside Targets = 3.629 – 3.747.
  • Bearish EROVB (Extended Range Outside Vertical Bar) generated on Monday after making new contract highs @ 3.648.
  • November Natural Gas dropped sharply lower in the second half of trading on Monday as non-commercial traders increased their net short position in the market as it traded to last week’s low range support zone below $3.45.
  • Look for an early session rally in natural gas and should it run into additional resistance near Friday’s low, traders should aggressively sell this market expecting the previous two-weeks’ low to be violated.
  • Projected Daily Range: .136
  • Projected Weekly Range: .260
  • Projected Monthly Range: .624

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