Natural gas expects pressure as mild weather abounds

Daily Market Analysis for Monday, 08/19/2013

KEY TERMS

OVB      Outside Vertical Bar
VRCB   Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (October ‘13):

  • Short Term Trend is bullish.
  • Confirmation of a bottom with a range violation on 08/12/2013 @ 106.96. Confirmation of a bottom with a close violation on 08/12/2013 @ 107.74. Upside Targets = 111.43 – 113.15.
  • New highs made on the current move Friday @ 110.70.
    • October Brent Crude did indeed break through the all too familiar $110 level this past trading week as it expanded to its highest contract levels since February while also moving through the 50-week moving average and impacting the weekly resistance Bollinger Band.
    • While Brent has enjoyed a nice $10 rally since the end of last quarter and is trading at some shorter term overbought levels, the market should have at least another $3-$4 left in the current rally before meeting any headwinds toward the beginning of September.
  • Projected Daily Range: 1.52
  • Projected Weekly Range: 3.74
  • Projected Monthly Range: 9.49

WTI Crude Oil (September ‘13): (NYMEX:CLU13)

  • Short Term Trend is bullish.
  • Confirmation of a bottom with a range violation on 08/12/2013 @ 105.36. Confirmation of a bottom with a close violation on 08/06/2013 @ 105.52. Upside Targets =  109.27 – 111.14
  • New highs made on the current move Friday @ 107.95.
    • September WTI Crude Oil generated a weekly VRCB formation this past week while at the same time trading to new annual contract highs.
    • WTI could not, however, keep pace with the gains of Brent as the spread increased to just over $3 from $1.71 a week ago.
      • WTI is likely to see the trend of an increasing spread between itself and Brent over the next couple of weeks and could ultimately see its upside potential limited to just the $110 level without a serious injection of volatility.
  • Projected Daily Range: 1.78
  • Projected Weekly Range: 4.92
  • Projected Monthly Range: 9.13

Natural Gas (September ‘13): (NYMEX:NGU13)

  • Short Term Trend is bearish.
  • Confirmation of a bottom with a range violation on 08/12/2013 @ 3.327. Confirmation of a bottom with a close violation on 08/14/2013 @ 3.342. Upside Targets = 3.461 – 3.534
  • New highs made on the current move Friday @ 3.434.
    • September Natural Gas finished higher for the first time in four weeks during this past week’s trading activity on a lower than expected injection into storage Thursday followed by massive technical short-coverings early in the week.
    • The market stopped intra-week exactly at the previous lows made earlier in the year (old support becomes new resistance) and with an extension of mild weather throughout the country, natty should likely see new sellers come back into the market and pressure it down below $3.20 once again to retest the current lows @ $3.129
  • Projected Daily Range: .098
  • Projected Weekly Range: .215
  • Projected Monthly Range: .548
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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