Natural gas set to fall as cold spell relents

Daily Market Analysis (SHORT TERM) Monday 01/28/2013


KEY TERMS

OVB       Outside Vertical Bar
VRCB    Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (March ‘13):

  • Short Term Trends are bullish.
  • Confirmation of a top with a range violation on 01/11/13 @ 109.13. Confirmation of a bottom with a close violation on 12/12/12 @ 107.17. Upside Targets = 110.67 – 111.37.
  • March Brent Crude continued to slowly move higher on Friday as it made new highs for the year but closed back below the daily mid-range and inside the daily RBB for the only time last week.
  • With an IT double VRCB formation established last week, Brent has a 99.875% chance of having a weekly trading range greater than $2.49 this week, which will either help push Brent through the $115 ceiling or start a ST correction back down to below $110.
  • Projected Daily Range: 1.12
  • Projected Weekly Range: 3.50
  • Projected Monthly Range: 7.54

WTI Crude Oil (March ‘13):

  • Short Term Trends are bullish.
  • Confirmation of a bottom with a range violation on 01/08/13 @ 93.36. Confirmation of a bottom with a close violation on 12/18/12 @ 88.40. Upside Targets = 96.36 – 97.57.
  • Second consecutive inside day generated on Friday.
  • March WTI Crude Oil was unable to build on last week’s positive momentum as it traded out to the side virtually all week and actually closed down from the previous week.
  • Given that WTI generated its second VRCB week in the past three trading weeks, if it is unable to trade and close outside of last week’s high, WTI could be forming a ST top that could see the market fall back below $92.
  • Projected Daily Range: 1.55
  • Projected Weekly Range: 3.29
  • Projected Monthly Range: 7.18

Natural Gas (February ‘13):

  • Short Term trend is bearish.
  • Confirmation of a bottom with a range violation on 01/14/2013 @ 3.359. Confirmation of a bottom with a close violation on 01/14/2013 @ 3.373. Upside Targets = 3.583 – 3.628.
  • VRCB generated on Friday making new lows on the current move @ 3.423.
  • March Natural Gas logged a small gain on Friday with bearish divergent price action in a tight trading session as traders seemed at odds on the next direction of the trade.
  • With current weather forecast signaling an end to the recent cold spell that has plagued the northeast, natural gas could drop to the mid-$3.30s before any buyers return and the next, and possibly last, up leg of the season begins.
  • Projected Daily Range: .099
  • Projected Weekly Range: .250
  • Projected Monthly Range: .492

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