WTI oil gains upper hand as Brent spread narrows

Daily Market Analysis for Monday 03/25/2013

KEY TERMS

OVB      Outside Vertical Bar
VRCB   Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (May ‘13):

  • Short Term Trends are bullish.
  • Confirmation of a top with a range violation on 03/19/13 @ 107.77. Confirmation of a top with a close violation on 02/20/13 @ 115.60. Downside Targets = 105.66 – 104.57.
  • VRCB generated on Friday making new lows on the current move @ 106.90.
    • May Brent Crude continued to drop lower this past week as the spread between itself and WTI narrowed to less than $14 for the first time since May 2011 before stopping just 7 ticks above the mid-point of my secondary support zone located at $106.83 (107.42 – 106.24).
    • Although the weekly price action is decisively bearish and indicates that this past week’s low should be violated, after impacting the daily SBB while ST stochastic’s are at their lowest readings since June 22, 2012…the low day of the year traders should stand alert and expect a consolidation struggle near $106.38 – $104.67 that may present another low risk opportunity.
  • Projected Daily Range: 1.37
  • Projected Weekly Range: 3.72
  • Projected Monthly Range: 6.89

WTI Crude Oil (May ‘13):

  • Short Term Trends are bearish.
  • Confirmation of a top with a range violation on 03/21/13 @ 92.35. Confirmation of a bottom with a close violation on 03/07/13 @ 92.03. Upside Targets = 95.35 – 96.41.
  • Close > High Of the Low Day generated on Friday. Possible Standard TREND REVERSAL to bullish at $93.95.
    • May WTI Crude Oil partially confirmed an IT TREND REVERSAL back to bullish this past week with a range violation above $94.20 but struggled to find its footing through the rest of the week before finally logging a positive session on Friday for its best single day gain in six weeks.
    • WTI should press higher as it has been the stronger of the two oil markets and break the $95 mark early in the coming week’s trading session as part of a longer term push back towards $100.
  • Projected Daily Range: 1.49
  • Projected Weekly Range: 3.15
  • Projected Monthly Range: 6.69

Natural Gas (May ‘13):

    • Short Term trend is bullish.
    • Confirmation of a bottom with a range violation on 02/20/13 @ 3.399. Confirmation of a bottom with a close violation on 02/22/13 @ 3.406. Upside Targets = 3.556 – 3.590.
    • Inside compression day generated on Friday.
      • May Natural Gas continued to make strides higher throughout this past week on lingering cold weather in the northeast as it logged its 12th consecutive day of higher lows on Friday.
      • Natural Gas did, however, close lower for the last three trading sessions of the week generating a weekly WIMP formation with a close in the lower half of the trading range.
        • After penetrating the weekly RBB every day last week, this type of formation is typical of IT market tops but could take a week or so for a true and decisive break lower.
    • Projected Daily Range: .106
    • Projected Weekly Range: .243
    • Projected Monthly Range: .504
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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