Natural gas looks to confirm top, oil may bounce

Daily Market Analysis (SHORT TERM) Thursday 10/25/12


KEY TERMS

OVB       Outside Vertical Bar
VRCB    Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (December):

  • Short Term Trends are bearish.
  • 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 Wednesday @ 106.80. Downside Targets 120% achieved.
  • December Brent Crude traded almost exactly to the mid-point of the initial downside support zone listed in this week’s earlier reports at $107.18 – $106.50 before rallying to close near the day’s mid-range.
  • After seven consecutive sessions of lower closes, look for Brent to finally buck the trend and log a decent rally on Thursday as the market tries to erase some of the current losses.
  • Projected Daily Range: 2.29
  • Projected Weekly Range: 5.35
  • Projected Monthly Range: 12.02

WTI Crude Oil (December):

  • Short Term Trends are bearish.
  • 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 – 85.38
  • New lows generated on current move Wednesday @ 84.94. Downside Targets over 105% achieved.
  • December WTI Crude Oil continued to fall on Wednesday after larger than expected supply injections brought storage to its highest level in months causing WTI to spend most of its daily trading range below the Support Bollinger Band.
  • After the nearly $9 drop in the past four trading sessions, WTI is extremely oversold and traders should look for a 1-2 day rally, minimum, to reassess the will of the shorts heading into the weekend.
  • Projected Daily Range: 2.19
  • 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 10/18/2012 @ 3.841. Confirmation of a bottom with a close violation on 10/18/2012 @ 3.904. Upside Targets = 3.959– 4.077.
  • Bearish OVB generated on Wednesday. Possible confirmation of a top with a range violation at $3.751. Possible confirmation of a top with a close violation at $3.751 or lower.
  • December Natural Gas sank lower on Wednesday after violating Tuesday’s high by just four ticks and then dropping much lower throughout the rest of the session.
  • While the December natural gas did not rise as high as we had hoped to enter into the optimal sell zone, today’s price action indicates the underlying weakness in this market and selling at or near Wednesday’s mid-range should give way to not only new lows for the week but also a violation of last week’s low of $3.727 as well.
  • Projected Daily Range: .150
  • Projected Weekly Range: .260
  • Projected Monthly Range: .624

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