Natural gas faces possible correction to $3.50

Daily Market Analysis (SHORT TERM) Monday 10/29/12


KEY TERMS

OVB       Outside Vertical Bar
VRCB    Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (December):

  • Short Term Trends are bearish.
  • Confirmation of a bottom with a range violation on 10/26/12 @ 109.35. Confirmation of a bottom with a close violation on 10/26/12 @ 109.55. Upside Targets = 112.07 – 113.69.
  • Bullish OVB generated on Friday.
  • December Brent Crude Oil reversed course from its early session losses heading into the weekend after logging a two-day rally, as projected in last Thursday morning’s report, as it closed just above the weekly mid-range.
  • The two-day rally may have a little more room to move to the upside but because of the closure of the NYMEX and other exchanges look for volumes to be light across the board on Monday and futures to remain mostly stagnant.
  • Projected Daily Range: 2.22
  • Projected Weekly Range: 4.87
  • 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
  • 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 closed at its highest level in three days on Friday as the market has found some Short Term support at $85 and looks to try and build a base after the $8+ decline over the last week.
  • Monday should work its way lower in electronic trading as demand should diminish over the coming days and threaten the $85 mark early in the week.
  • Projected Daily Range: 1.81
  • Projected Weekly Range: 5.16
  • Projected Monthly Range: 11.33

Natural Gas (December):

  • Short Term trend is bearish.
  • Confirmation of a top with a range violation on 10/25/12 @ 3.751. Confirmation of a top with a close violation on 10/26/12 @ 3.724. Downside Targets = 3.661 – 3.577.
  • December Natural Gas dropped lower on Friday as it made new 13-session lows and closed below last week’s low, declining more than $0.25 from peak trading.
  • The weekly close reversal could indicate that a 2-3 week correction is in order and should this market trade below $3.622 it could facilitate a drop below $3.50 in short order.
  • Projected Daily Range: .116
  • Projected Weekly Range: .301
  • Projected Monthly Range: .624

METALS

COMEX Gold (December):

  • Short Term Trends are bearish.
  • Confirmation of a bottom with a range violation on 10/26/12 @ 1719.00. Confirmation of a top with a close violation on 10/09/12 @ 1765.00. Upside Targets = 1744.00 – 1775.60.
  • Bullish OVB generated on Friday. Possible confirmation of a bottom with a range violation @ 1719.00. Possible confirmation of a bottom with a close @ 1719.00 or higher.
  • December Gold settled just slightly lower on Friday in what turned out to be a volatile trading session as it challenged the $1,700/oz. threshold just before partially confirming a Short Term bottom at $1,719.
  • Gold should be able to build on the recent support that came into the market just $1 above the Q4 downside price objective and challenge last week’s high at $1,731.20 early in the week.
  • Projected Daily Range: 17.20
  • Projected Weekly Range: 44.90
  • Projected Monthly Range: 95.30

CURRENCIES

Euro FX (December):

  • Short Term Trends are bullish.
  • Confirmation of a top with a range violation on 10/19/12 @ 1.3061. Confirmation of a top with a close violation on 10/19/12 @ 1.3030. Downside Targets = 1.2900 – 1.2878.
  • The December Euro FX dropped lower on Friday as it cracked the 1.29 mark on its way to new two-week lows but finished the session strong; closing above 60% of the day’s trading range.
  • Based on Friday’s close, look for the euro to open a shade higher before falling to the pressure endured over the past week and a half and test the October lows at 1.2813.
  • Projected Daily Range: .0083
  • Projected Weekly Range: .0218
  • Projected Monthly Range: .0600

INDEXES

E-Mini S&P (December)

  • Short Term Trends are bearish.
  • Confirmation of a top with a range violation on 10/22/12 @ 1423.25. Confirmation of a top with a close violation on 10/23/12 @ 1416.25. Downside Targets = 1387.00 – 1382.00.
  • New lows made on current move Friday @ 1394.50.
  • The December S&Ps finished just a shade lower on Friday as it rallied back in the second half of trading to close in the upper 70% of the day’s trading range after initially falling to new seven-week lows.
  • Even though the S&Ps were able to come back and close above 1400, expect that trend to end this week as the market targets the downside Short Term objectives on its way to new two-month lows.
  • Projected Daily Range: 16.25
  • Projected Weekly Range: 39.75
  • Projected Monthly Range: 74.50
About the Author
Jim Parrish and Kris Hicks

Parrish Hicks Capital Research is a trading and technical analysis firm that specializes in Energy and Metal commodity futures. The two founders, Jim Parrish and Kris Hicks, have a combined 38 years’ experience 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. They also called the all-time high day for Gold on September 6, 2011 and forecasted a projected downside target of 1528.10 in March 2012.  Their trading methodology has a high degree of accuracy which confirms tops/bottoms, projected trading ranges and projected targets for those ranges. Their expertise is focused on 16 commodities plus the comparable ETF markets. You can reach them at Jim@ParrishHicks.com and Kris@ParrishHicks.com or at www.ParrishHicks.com.

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