Oil faces technical resistance, could drop to $83

Daily Market Analysis (SHORT TERM) Friday 11/02/12


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 top with a close violation on 11/01/12 @ 108.17. Downside Targets = 103.71 – 102.07.
  • VRCB generated on Thursday. Conservative confirmation of a top with a close @ 108.17.
  • December Brent Crude sank lower on Thursday while generating its third VRCB pattern in four trading days as it continues to struggle breaking down and trading through last week’s low.
  • Because of the light trading volume this week the market is currently on pace to generate a VRCB week as the market finds support near the $107 level but with an increase in volatility should trade to at least $106.23.
  • Projected Daily Range: 2.03
  • 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 bottom with a close violation on 11/01/12 @ 87.09. Upside Targets = 89.17 – 90.22.
  • December WTI Crude Oil moved higher on Thursday as it continues to outpace Brent for the week while narrowing the spread to just above $21 while closing at its highest level in eight trading sessions.
  • WTI is reaching a point of near certain resistance between $88.09 – $89.30 and should ultimately break back to the downside and trade to the Intermediate Term objective of $82.95.
  • Projected Daily Range: 2.10
  • 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.
  • Double VRCB pattern generated on Thursday.
  • December Natural Gas settled just slightly higher on Thursday in an abnormally un-volatile storage report day that missed expectations with a lower than expected build but last traded near the lows of the day.
  • Based on the recent price action and analysis that we have reported over the previous few days, natural gas specs continue to hold this market up above $3.60 and with a range violation above Thursday’s high could push the market back near the $4 threshold.
  • Projected Daily Range: .119
  • Projected Weekly Range: .301
  • Projected Monthly Range: .624

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