Natural gas bears set for fight with hedge funds at $3.60

Daily Market Analysis (SHORT TERM) Thursday 11/01/12

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 10/31/12 @ 108.50. Confirmation of a bottom with a close violation on 10/26/12 @ 109.55. Downside Targets = 103.71 – 102.07.
  • December Brent Crude dropped lower for the third straight day on Wednesday after partially confirming a Short Term top as it made new lows for the week after failing to crack $110 in early trading.
  • The current price action suggests that Brent should work its way lower on Thursday and head toward the new Short Term downside targets of $103.71 – $102.07.
  • Projected Daily Range: 2.11
  • Projected Weekly Range: 4.87
  • Projected Monthly Range: 12.02

WTI Crude Oil (December):

  • Short Term Trends are bearish.
  • Confirmation of a bottom with a range violation on 10/31/12 @ 86.44. 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 close @ 86.44 or higher.
  • December WTI Crude Oil settled just marginally higher on Wednesday as it made new five-session highs but failed to deliver a strong close as it settled below the daily mid-range as trading returned to normal on the NYMEX for the first time this week.
  • Traders shouldn’t expect much follow-through on Thursday as a slew of backed up economic reports and EIA storage reports are set to be released that may drive the market lower.
  • Projected Daily Range: 2.14
  • 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.
  • VRCB and inside compression day generated on Wednesday.
  • December Natural Gas came within just a penny of the optimal intraday sell price we were looking for on Wednesday before dropping lower throughout much of the session to last trade in the lower 15% of the day’s trading range.
  • Look for Wednesday’s bearish price action to be replicated on Thursday as a large storage number should roll out and push the market to new weekly lows where it will battle with bullish hedge funds that support the market at $3.60.
  • Projected Daily Range: .134
  • Projected Weekly Range: .301
  • Projected Monthly Range: .624

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