Author: Dean Rogers, CMT

Dean Rogers, CMT is the general manager of the Kase Call Center in Albuquerque, New Mexico. He oversees all of Kase and Company, Inc.’s operations including research and development, marketing, and client support. Dean began his career with Kase in early 2001 as a programmer but has developed into Kase’s senior technical analyst. He writes Kase’s award-winning weekly Crude Oil, Natural Gas, and Metals Commentaries. He is an instructor at Kase's classes and webinars and provides all of the necessary training and support for Kase's hedging models and trading indicators for both retail and institutional traders.

By Dean Rogers

Natural gas is still looking for support from weather, but until cold temperatures arrive in key areas of the U.S. prices should continue to grind lower. The negative bias is confirmed by KaseX’s filtered short signal (purple diamonds).

January futures met an important target at $2.15 on Wednesday. This was the 0.618 projection for the wave $2.347 – 2.175 – 2.259. A close below $2.15 would call for key support at $2.10, the 1.00 projection.

The importance of $2.15 indicates a correction might take place first, but look for resistance at $2.22 to hold. A close over $2.22 would call for $2.26 and possibly $2.30. A move higher than $2.30 is doubtful without support from weather.

This is a brief natural gas forecast for the next day or so. Our weekly Natural Gas Commentary is a much more detailed and thorough analysis. If you are interested in learning more, please sign up for a complimentary four week trial.

By Dean Rogers

For the past few weeks gasoline futures rose in a dramatic fashion and lent some support to underlying WTI and Brent futures prices. However, a few bearish technical factors indicate the move up is probably complete and that a major test of support is now underway.

January gasoline futures stalled at the crucial 62 percent retracement of the decline from $1.4516 to $1.1962. In addition, Monday’s $1.3069 settle completed an evening star and hammer candlestick pattern and a moderately bearish overbought signal on KaseX (gray arrow). All three factors indicate the decline should continue.

The pullback has retraced 38 percent of the move up from $1.1962 to $1.3731 so far. A close below $1.2972 will confirm the evening star and hammer and call for at least $1.285 and very likely $1.264, the 50 and 62 percent retracements, respectively. These are also confluent intraday wave projections.

From a technical standpoint, the move down is corrective of the move up until there is a close below $1.264. Odds for a move of this magnitude over the next week or so are 65 percent.

Look for resistance at $1.33 to hold. A close over $1.354 would be positive and open the way for $1.412 and higher.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested, please sign up for a complimentary four week trial.

By Dean Rogers

Natural gas’s upward correction has been held at bay as the market seeks frigid temperatures to support a move higher. January is settling into the familiar range between approximately $2.26 and $2.39 that December oscillated in before it finally broke lower. This is likely where prices will remain for the rest of the week due to the Thanksgiving holiday.

The move up is corrective, and that point was verified on Wednesday when prices initially broke higher out of an intraday coil and subsequently stalled at $2.347 before overcoming the $2.351 swing high.

Meeting the 0.618 projection for the wave $2.229 – 2.351 – 2.258 indicates January could still test $2.39, which is near the 1.00 projection and the 38 percent retracement of the decline from $2.60 to $2.229, as long as the $2.258 swing low holds. However, without support from external factors (cold temperatures) the market will be hard pressed to rise above $2.39 and extend to the next confluence point of $2.48.

Odds favor the decline and a test of $2.26 by the end of this week. This is a tough call right now because the market is sitting on major support, and external factors could turn this market higher in a heartbeat. Therefore, provided $2.26 can hold, there is still a reasonable chance the upward correction will extend to $2.39, but at this point we would not hold our breath.

Happy Thanksgiving to all!

By Dean Rogers

January WTI futures met crucial support at $40.41 early Monday. This was the 1.00 projection for the wave $52.02 – 43.52 – 49.23. The subsequent move up was initially promising for bulls, but stalled at $42.75 before it could overcome $43.2 resistance.

It is a tight call tomorrow, but we expect a test of $40.9 before the move up continues. This is confirmed on the intraday charts by the latest KaseX weak short signal (pink triangle). Support at $40.9 is near the 0.618 projection of the wave $42.75 – 41.09 – 42.62 and the $41.09 swing low. A close below $40.9 would call for $40.0 and possibly lower.

Conversely, not all hope is lost for the upward correction to extend. The daily chart’s Kase Easy Entry System (KEES) permissions shifted from first class short (pink dots) to second class long (light blue dot). Therefore, there is still a reasonable chance for a close over $43.2 and an upward correction to $43.8, the 38 percent retracement from $49.23 to $40.41. A close over $43.8 would significantly increase the probability for an extended move to test major resistance levels.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil forecast is a much more detailed and thorough energy price forecast. If you are interested, please sign up for a complimentary four week trial.

By Dean Rogers

As we stated last week, the natural gas call is extremely tight right now. The market can only tell us what it knows about itself, and right now the market is not sure what it knows.

The move up from $2.188 stalled at $2.398 on November 6, and since then prices have worked their way lower in an extremely choppy manner to test major support at $2.25. This level held on today’s close, so technically prices are still trading within the range.

The market is waiting on cold weather to push it higher, but today’s price action did not help short-term bulls. It will eventually get cold and prices will rise, but today’s decline to $2.25 puts odds slightly in favor (around 60 percent) of a decline to test least $2.20 and possibly $2.12 over the next few days.

That said, $2.25 is an extremely important and highly confluent wave projection and retracement that has been tested a few times and has held on a closing basis since the move up from $2.188 began on October 30. Therefore, caution is warranted, and given the circumstances, we would not be at all surprised to see $2.25 continue to hold.

From a trading strategy standpoint, this is a time that we would normally recommend sitting on the sidelines for a bit while waiting for a more concise direction and break out of the $2.25 to $2.37 range. Upon a close below $2.25 or above $2.37, a trade may be taken upon a confirming long or short signal from indicators like Kase StatWare or KaseX. Shorter bar lengths are also recommended because they will help limit risk and should be used to pinpoint entries and exits and determine stop levels until there is a close either below $2.12 or above $2.48. At that point a clear long-term trend will have been established and trades may then be scaled to longer bar lengths with wider stops.

This is a brief natural gas forecast ahead of tomorrow’s EIA report. Our weekly Natural Gas Commentary is a much more detailed and thorough analysis. If you are interested in learning more, please sign up for a complimentary four week trial.

By Dean Rogers

WTI stalled near $48.0 as we expected in our weekly Crude Oil Commentary and the sustained close below $44.7 calls for a test of key support at $43.2. This is a confluence area that is near the 0.618 projection of the wave $51.42 – 42.58 – 48.36. A close below $43.2 would confirm the negative outlook and open the way for a continued decline.

The Kase Easy Entry System (KEES) confirms the negative bias. Today’s pink dot indicates that the majority of momentum indicators are permissioned short on the daily chart and that the synthetic three-day filter is also permissioned short.

That said, the shorter intraday bar lengths are showing that the decline from $48.36 is a bit overextended, exhausted, and due for a correction. The correction will most likely take place once $43.2 is met. First resistance is $44.5. Key resistance is $45.4, the 38 percent retracement from $48.36 to $43.64. Both levels are in line with the opening prices of the last few days. A close over $45.4 would call for an extended upward correction and a likely trading range for the near-term.

This is a brief analysis and crude oil forecast for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested, please sign up for a complimentary four week trial.

By Dean Rogers

Natural gas cautiously rose to $2.317 to fulfill the smaller than (0.618) projection for the wave $2.188 – 2.336 – 2.231. Typically, a move to $2.38 would now be expected because waves that meet the 0.618 projection normally extend to at least the equal to (1.00) projection. The pullback to $2.255 is a bit worrisome, but until the $2.231 swing low is taken out odds favor of a move to $2.38. This is a crucial target because $2.38 is the 38 percent retracement from $2.78 to $2.188 and makes a connection to $2.48 where last week’s gap would be filled.

KaseX warned that the decline from $2.317 would extend (yellow triangle), and as stated, support at $2.25 is already being challenged. A move below $2.231 would take out the wave up from $2.188 and its projections to $2.38 and higher. This would in turn shift odds back in favor of a decline to $2.11 to fulfill the requirements of the textbook five wave pattern down from $3.391 as discussed last week.

By Dean Rogers

Last week several top refiners reported a jump in their third quarter earnings compared to a year ago. Attractive crack spreads and refining margins due to lower oil prices and healthy demand for gasoline have helped refiners pump in profits. In addition, last week’s rise in oil prices, which was partially attributed to a quick turnaround in the refinery maintenance season, has helped to stabilize gasoline futures and open the way for a test of key resistance near $1.43.

December gasoline futures have oscillated in a trading range bound between approximately $1.26 and $1.43 since early September. The most recent move up from $1.26 overcame resistance at $1.36 and is now poised to test the upper boundary of the range at $1.43. This is the 2.764 projection for the small wave $1.2621 – 1.323 – 1.2627, the 0.618 projection for the wave $1.1756 – 1.4604 – 1.2621, and the 38 percent retracement of the decline from $1.8392 to $1.1756. There is a good chance that $1.43 will hold, but a close over this would open the way for at least $1.55.

The Kase Easy Entry System (KEES), which is based upon a sophisticated algorithm that accounts for multiple momentum indicators, bar lengths, swings, and bar structure, confirms the positive bias in the near term. The blue dot indicates that the underlying indicators and bar lengths are permissioned for long trades to be taken.

Prices are expected to reach at least $1.43 before another turn lower to test support takes place. For now, look for immediate support at $1.31 and for key support at $1.26. A close below the latter would call for the late August low of $1.1756 to be challenged.

By Dean Rogers

As discussed last week, everyone is looking for the natural gas bottom. I am sure no one wants me to step back onto my “picking bottoms is a dangerous game” soap box, so I will just reiterate that the best anyone can do is identify potential turning points and look to time entries and exits that fit their trading style, risk appetite, and goals.

With that in mind, let’s discuss the potential turning points for natural gas at today’s $2.263 swing low and at $2.11, the latter of which I think is the most likely point for a bottom to be made.

December’s wave structure down from $3.391 has unfolded in a five-wave pattern. We are not Elliott Wave fanatics or strict practitioners, but when a textbook pattern forms we pay attention.

Below are some of the basic Elliott Wave rules we abide by and look for when a five-wave pattern forms.

Basic Elliot Wave Rules, according to Kase:

A five-wave pattern is made up of three impulse waves and two corrective waves
Two of the three impulse waves should be equal in size
The impulse waves, labeled I, III, and V, should break down into five sub-waves.
Wave III cannot be the smallest impulse wave
Waves I, III, and IV should be proportional to one another (0.618, 1.00, 1.382, 1.618, etc.)

For the five-wave pattern down from $3.391 wave I met its 1.618 projection at $2.607 (end of wave III) and trend terminus (2.969³/3.391²) at $2.263 (potential end of wave V). The lowest that wave I projects is $2.12 as the 2.764 extension.

Given the importance of $2.263, the ticks up after the close, and oversold conditions on the KasePO, KaseCD, and slow stochastic, prices might turn higher from this level.

However, at this point there are not two equal waves. At $2.36 waves I and V were equal, but prices fell to $2.263. At $2.10 waves III and V will be equal. Therefore, based upon the basic Elliott Wave Rules, December will likely fall to the confluence point of $2.11 where wave I will have met its 2.764 projection and waves III and V will be equal.

From $2.11 we would expect to see a three-wave correction, and because of the time of year, a significant rally as the market heads into the winter heating season. A sustainable rally will be confirmed by a KasePO PeakOut, KaseCD KCDpeak, and %K over %D crossover as momentum rises out of oversold territory on the slow stochastic.

There are no guarantees that $2.11 will hold over the course of the longer-term, but this has become the most likely point at which a bottom will be made.

By Dean Rogers

December WTI’s wave $39.22 – 50.89 – 44.31, which met its 0.618 projection at $51.42, has been taken out by the $43.64 swing low. Consequently a technical failure of the move up has taken place and odds have shifted in favor of a continued decline. Look for $43.0 tomorrow and very likely $42.5 over the next few days. A close below $42.5 would confirm the negative outlook and technical failure. There is an outside chance that the support trend line will hold. Look for resistance at $45.4 and $46.5.

Natural Gas Forecast: January Poised to Test $2.10

Basic Elliot Wave Rules, according to Kase: