Oil collapse opens gates to further downside moves

Daily Market Analysis for Thursday 02/21/2013

KEY TERMS

OVB      Outside Vertical Bar
VRCB   Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (April ‘13):

  • Short Term Trends are bullish.
  • Confirmation of a top with a range violation on 02/20/13 @ 116.27. Confirmation of a top with a close violation on 02/20/13 @ 115.60. Downside Targets = 113.47 – 112.27.
  • Bearish EROVB generated on Wednesday making new lows on the current move @ 115.02.
    • April Brent Crude failed to move above $118 on Wednesday despite some early strength as hawkish comments from the FOMC members spooked the market as it neared two-week lows.
    • With Brent having finally traded below the 20-day moving average, look for some traders to stick their toes in the water below $114 but for the move to ultimately continue lower down near $113.47.
  • Projected Daily Range: 1.65
  • Projected Weekly Range: 3.81
  • Projected Monthly Range: 6.75

WTI Crude Oil (March ‘13):

  • Short Term Trends are bullish.
  • Confirmation of a bottom with a range violation on 02/13/13 @ 97.80. Confirmation of a top with a close violation on 02/04/13 @ 96.17. Downside Targets = 95.24 – 94.39.
  • Bearish EROVB generated on Wednesday making new lows on the current move @ 94.21.
    • April WTI Crude Oil broke severely below the daily SBB on Wednesday in an extremely volatile trading session as it neared the 50-day moving average and made new lows for the month.
    • Look for the rest of February to trade to the downside and target $92.23 by the end of the month as the sequester nears and political risks heat up the volatility factor in the market.
  • Projected Daily Range: 1.75
  • Projected Weekly Range: 2.88
  • Projected Monthly Range: 6.42

Natural Gas (April ‘13):

  • Short Term trend is bearish.
  • Confirmation of a bottom with a range violation on 02/20/13 @ 3.337. Confirmation of a top with a close violation on 02/08/13 @ 3.332. Downside Targets = 3.249 – 3.169.
  • VRCB generated on Wednesday.
    • April Natural Gas traded within a very fixed range on Wednesday as the initial move higher was thwarted by 2013’s largest “risk-off” trading day, keeping a lid on the market to finish unchanged.
    • Colder weather temps/forecasts enabled the market to be mostly unaffected by the downturn in the commodity complex Wednesday and should Thursday’s storage number be in-line with expectations, look for a gateway to $3.50 gas for April before trading back lower toward $3.
  • Projected Daily Range: .102
  • Projected Weekly Range: .194
  • Projected Monthly Range: .492
About the Author
Kris Hicks

KMH is a trading and technical analysis firm that specializes in commodity futures and commodity based ETF’s. Kris Hicks has worked for numerous years 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 in oil. He also called the all-time high day for gold on Sept. 6, 2011 and forecasted a projected downside target of 1528.10 in March 2012. He was also responsible for projecting the Q2 and Q4 low in the Euro FX to within 13 and 9 ticks, respectively. His trading methodology has a high degree of accuracy which confirms tops/bottoms, projected trading ranges and projected targets for those ranges. His expertise is focused on 16 commodities plus the comparable ETF markets. You can reach Kris at Kris@KMH-Capital.com or visit his website at www.KMH-Capital.com.

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