Natural gas could crack $4.00, oil sees short coverings

Daily Market Analysis (SHORT TERM) Friday 10/26/12


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.
  • Inside compression day generated on Thursday. Possible confirmation of a bottom with a range violation @ 109.35. Possible confirmation of a bottom with a close @ 109.35 or higher.
  • December Brent Crude rebounded from its recent seven-day skid as projected in Thursday morning’s report as it looks to eliminate some of the losses sustained over the past few weeks amid negative earnings reports and a weaker outlook for the coming months.
  • The one key aspect that delineates Brent from WTI is the fact that it remains able to hold up at key support prices and until it breaks down and closes below $106, this market remains bullish.
  • Projected Daily Range: 2.28
  • 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
  • Inside compression day generated on Thursday. Possible confirmation of a bottom with a range violation @ 87.48. Possible confirmation of a bottom with a close @ 87.48 or higher.
  • December WTI Crude Oil moved just slightly higher on Thursday while in a round of modest short covering because of significant price drops leading to an oversold market.
  • With Thursday’s indeterminate price action, expect WTI to move just slightly higher in early morning trading before falling back lower to settle just off the weekly lows of $84.94.
  • Projected Daily Range: 2.55
  • Projected Weekly Range: 4.93
  • Projected Monthly Range: 11.33

Natural Gas (November):

  • Short Term Trend is bullish.
  • Confirmation of a top with a range violation on 10/25/12 @ 3.751. Confirmation of a bottom with a close violation on 10/18/12 @ 3.904. Upside Targets = 3.959– 4.077.
  • Possible confirmation of a top with a close violation @ 3.751 or lower
  • December Natural Gas settled just slightly higher on Thursday in what turned out to be an extremely volatile trading session after the market initially broke through both this week’s and last week’s low and then closed back above the daily mid-range.
  • While natural gas exhibited bearish divergent price action on Thursday, if the market cannot break-through $3.70 to retest the next support price of $3.65, natural gas could move back to the upside and crack the $4.00 threshold.
  • Projected Daily Range: .125
  • Projected Weekly Range: .260
  • Projected Monthly Range: .624

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