Natural gas comes off lows, could see short-covering rally

Daily Market Analysis (SHORT TERM) Tuesday 12/18/2012


KEY TERMS

OVB       Outside Vertical Bar
VRCB    Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (February ‘13):

  • Short Term Trends are bullish.
  • Confirmation of a bottom with a range violation on 12/12/12 @ 107.53. Confirmation of a bottom with a close violation on 12/12/12 @ 108.02. Upside Targets = 110.67 – 111.37
  • VRCB generated on Monday.
  • February Brent Crude dropped lower in a very thin trading session Monday but was unable to trade much past Friday’s mid-range before last trading back near the $108 level.
  • Brent has been stuck in a monotonous trading range over the last eight sessions but with a move above last week’s high of $108.92 it should have enough momentum to trade above $110 and the initial upside target of $111.39.
  • Projected Daily Range: 1.67
  • Projected Weekly Range: 4.29
  • Projected Monthly Range: 9.03

WTI Crude Oil (February ‘13):

  • Short Term Trends are bullish.
  • Confirmation of a top with a range violation on 12/05/12 @ 88.16. Confirmation of a top with a close violation on 12/06/12 @ 86.6.85. Downside Targets = 86.01 – 85.24.
  • February WTI Crude Oil moved slightly higher on Monday before coming up just shy of last week’s high (1 tick) and settled back at the day’s mid-range.
  • Based on the recent price action in WTI of consistent higher lows, crude should break through last week’s high early on Tuesday and target the daily RBB ($89.87) by week’s end.
  • Projected Daily Range: 1.46
  • Projected Weekly Range: 3.58
  • Projected Monthly Range: 8.74

Natural Gas (January ‘13):

  • Short Term trend is bearish.
  • Confirmation of a top with a range violation on 11/28/2012 @ 3.840. Confirmation of a top with a close violation on 11/28/2012 @ 3.801. Downside Targets = 3.746 – 3.708.
  • Possible confirmation of a bottom with a range violation @ 3.396. Possible confirmation of a bottom with a close violation @ 3.396 or higher.
  • January Natural Gas was able to log its first daily gain in almost two weeks on Monday after finding strong support under $3.30 and nearly generated a bullish close reversal before coming up just a few ticks shy.
  • If natural gas can push through the $3.40 level in early trading on Tuesday, look for the bullish momentum to carry this market up to at least $3.51 on mere short-covering alone and extend even further with a bullish storage number later this week.
  • Projected Daily Range: .111
  • Projected Weekly Range: .287
  • Projected Monthly Range: .557

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