Natural gas drop may signal intermediate-term highs

Daily Market Analysis for Monday, 05/06/2013

KEY TERMS

OVB      Outside Vertical Bar
VRCB   Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (June ‘13):

  • Short Term Trend is bearish.
  • Confirmation of a bottom with a range violation on 04/20/13 @ 100.34. Confirmation of a bottom with a close violation on 04/20/13 @ 100.39. Upside Targets = 106.40 – 108.61.
  • New highs made on the current move Friday @ 104.92.
    • June Brent Crude generated a bullish OVB formation this past week rallying hard off of Wednesday’s lows and confirming an IT bottom on Friday’s close.
    • While the technical trends are still decisively bearish, this type of formation after a $20+ move from the highs is indicative of a move higher that typically retrace at least 50% of the move lower, placing a minimum upside price objective at $107.96 with a more aggressive price target of $110 before it faces any significant headwinds.
  • Projected Daily Range: 2.23
  • Projected Weekly Range: 5.72
  • Projected Monthly Range: 9.59

WTI Crude Oil (June ‘13):

  • Short Term Trend is bearish.
  • Confirmation of a bottom with a range violation on 05/03/13 @ 94.26. Confirmation of a bottom with a close violation on 05/01/13 @ 94.26. Upside Targets = 97.92.
    • June WTI Crude Oil exploded higher in the second half of the trading week this past week following positive domestic jobs and economic data releases, prompting a $5+ rally in the last two sessions of the week.
    • The market initially stopped where it should have on Monday giving a false signal that there would be a solid retest of the current contract and annual lows, but the price action generated heading into the weekend suggests that WTI may be able to push higher than initially expected toward as high as $98 before meeting further resistance.
  • Projected Daily Range: 2.36
  • Projected Weekly Range: 5.83
  • Projected Monthly Range: 8.93

Natural Gas (June ‘13):

  • Short Term Trend is bullish.
  • Confirmation of a top with a range violation on 04/24/13 @ 4.201 Confirmation of a top with a close violation on 04/24/13 @ 4.200. Downside Targets = 3.988 – 3.875.
  • New lows made on the current move Friday @ 3.977.
    • June Natural Gas was crushed this past week after making new spot contract highs on Wednesday before a bearish storage number was released and the market saw massive liquidation on Thursday for its biggest single day drop in more than a year.
    • The price action this past week not only confirmed a ST top but also a likely IT top (will be confirmed with a range violation of this past week’s low).
      • Should natural gas continue to be sold off this week, it sets up the possibility that the highs for at least the next six months may be in and could lead to a drop as low as $3.645
  • Projected Daily Range: .146
  • Projected Weekly Range: .373
  • Projected Monthly Range: .570
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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