Low oil volatility may be setting up for big breakout

Daily Market Analysis for Monday, 06/10/2013

KEY TERMS

OVB      Outside Vertical Bar

VRCB   Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (August ‘13):

  • Short Term Trend is bearish.
  • Confirmation of a bottom with a range violation on 06/05/13 @ 103.26. Confirmation of a bottom with a close violation on 06/06/13 @ 103.33. Upside Targets = 109.11 – 113.72.
  • New highs made on the current move Friday @ 104.80.
    • July Brent Crude bullish price action flew in the face of the previous week’s close confirmation of a top as it likewise generated an outside trading week and settled just within the MT upward trend-channel.
    • Although the rate of change is a little overbought ST, Brent should be able to find some steady support near the weekly mid-point and could follow with a rally that brings it back above the $105 and signal a possible IT TREND REVERSAL back to bullish which would give reason for the market to take aim once again at the $110 mark.
  • Projected Daily Range: 1.82
  • Projected Weekly Range: 4.89
  • Projected Monthly Range: 8.97

WTI Crude Oil (July ‘13):

  • Short Term Trend is bearish.
  • Confirmation of a bottom with a range violation on 06/05/13 @ 94.42. Confirmation of a bottom with a close violation on 06/06/13 @ 94.76. Upside Targets = 97.55 – 99.12.
  • New highs made on the current move Friday @ 96.39.
    • July WTI Crude Oil did see a slight injection of volatility over this past week but it was back to the upside as the market generated an outside trading week and closed back above $96. WTI has effectively traded in the same $6 trading range ($90-$96) throughout the entire year, only a 1/3 of its expected annual trading range even though half of the year is now almost complete.
    • Given the extremely low level of volatility in the market, this technical pattern could be setting for a possible breakout to the upside as signs of a bull flag are reaching a tipping point where the market will either take off back toward the 2012 highs or share the same fate as gold did earlier in the year when it could not trade and close above the vortex price of $1,700.
  • Projected Daily Range: 1.79
  • Projected Weekly Range: 4.88
  • Projected Monthly Range: 9.15

Natural Gas (June ‘13):

  • Short Term Trend is bearish.
  • Confirmation of a top with a range violation on 05/30/13 @ 4.117. Confirmation of a top with a close violation on 05/30/13 @ 4.023. Downside Targets = 3.957 – 3.879.
  • New lows made on the current move Friday @ 3.814.
    • July Natural Gas traded to its lowest level since late March during this past week as it impacted the 20-week moving average while confirming an IT TREND REVERSAL to bearish.
    • Natural gas should continue lower early in the trading week toward the psychological support price of $3.75 before a modest short-covering rally into the storage report that is likely to fizzle as the market sets up for a move back down to $3.60.
  • Projected Daily Range: .107
  • Projected Weekly Range: .275
  • Projected Monthly Range: .614
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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