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

The world’s supply of crude oil continues to outpace demand, and consequently the global supply glut is being forecast through 2016. WTI fell to its lowest level in over six years last week and Brent is inching its way closer to testing the $45.19 low made on January 13, 2015. A move below this would be the lowest price at which Brent has traded at in over six years.

Structurally, the market is overdue for a correction and Brent’s daily morning star setup, a bullish candlestick pattern, warns that such a correction might take place soon. The decline’s momentum is also weakening, and there are daily and weekly divergence setups for Brent.

Brent and products attempted to stabilize and even rise in a corrective manner last week, but the move stalled. On Friday Brent crude broke lower out of the intraday coil shown below on the $0.50 Kase Bar chart.

The break lower out of the coil indicates the decline should continue. The waves projections down from $55.0 (green), $51.69 (light blue), and $50.83 (blue) call for at least $47.9. This is a confluent wave projection that connects to $46.9 and finally $45.5.

The move down is becoming a grind, but until Brent crude can close over at least $49.9, look for the move down to extend. A close over $49.9 would at least create the potential for an extended upward correction.

This is a brief analysis and outlook for the near-term. 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

For several weeks natural gas has been trading within a range bound between $2.65 and $2.95, and more recently between $2.71 and $2.88. On Wednesday natural gas prices closed at the highest level since May 21 at $2.931, and the first class KEES permissions (blue dots) confirm the positive tone. Natural gas futures are now poised to overcome $2.95 and challenge $3.00. This is a confluent projection for the waves up from $2.656 and $2.706.

A close over $3.00 will open the way for an extended upward correction, but keep in mind, this rally may be short lived as the end of summer and its warm weather are rapidly approaching. This upward correction may very well be the last hurrah before the end of summer, and it is going to be a lot easier for longer-term bears to short from $3.00 versus $2.70.

In addition, not only is the market is nearing a past failure point at $2.95, but both the KaseCD and KasePO momentum indicators are setup for bearish divergence. This is a signal that forms when higher price highs are accompanied by lower momentum highs. Bearish divergence is a signal that indicates the move up is exhausted.

Should price turn lower look for support at $2.85 and $2.70. These are the 38 and 62 percent retracements of the move up from $2.706 to $2.934.

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. We also offer trials of our trading indicators.

By Dean Rogers

For the past eight weeks September WTI crude oil futures have closed lower, and the decline is quickly approaching major support at $42.5. Many pundits claim the sky is falling, but it is usually at times like this that the market will finally find support and at least attempt to make a bottom.

We have discussed $42.5 as major target and potential bottom in our weekly blog update and in our detailed crude oil forecast for several weeks. There is no definitive evidence that the move down is going to end, but on Monday a few positive signs formed that indicate an extended upward correction may take place.

Monday’s bullish engulfing line, exhausted daily KasePO and KaseCD momentum, weekly divergence setups, and the intraday wave up from $43.35 all show that the upward correction may test $45.9 and possibly $47.5 before the decline continues.

For now, there is no evidence that this will be a major correction, not yet at least, but the fact that the market is starting to show some positive signs of life could mean the move down will end soon.

That said, important resistance was met at $45.01, so we expect to see a pullback to $44.3, Monday’s midpoint, in early trading Tuesday. A close below $44.3 would negate many of the aforementioned positive factors and open the way for $42.5 to finally be met.

By Dean Rogers

Patience is a virtue.

Natural gas has been trying the patience of traders as it continues to trade in a range between approximately $2.65 and $2.95. This week’s rise from $2.706 is very similar to last week’s move up from $2.735, and given today’s decline and close below $2.80, it looks like another failure to overcome key resistance at $2.89 is taking place…again!

September futures stalled at $2.863, the 62 percent retracement from $2.957 to $2.706. This is also just below $2.892, the 0.618 projection of the wave up from $2.656. The retracements and projections confirm that $2.89 is a key level. A close over this would call for an attempt to overcome $2.95 and break out of the trading range.

However, the bearish KaseCD divergence and close below $2.80, the 38 percent retracement from $2.706 to $2.863, indicates prices are now positioned to challenge support at $2.77, the 62 percent retracement. A close below $2.77 would then open the way for another attempt of $2.65 and lower.

The take away this week – be patient.

By Dean Rogers

RBOB Gasoline futures tested support at 167.43 on Monday and have taken out the crucial 169.25 swing low. The outlook is negative, but many technical factors, including Monday’s dip below the lower Bollinger Band, indicate a correction should take place once 160.0 is met. This is the confluence point between the 62 percent retracement of the move up from 122.65 and the 1.618 projection for the primary wave down from 218.58.

Look for resistance at 172.3 and 181.3. The latter is expected to hold.

By Dean Rogers

Natural gas continues to oscillate in a range between $2.65 and $2.95 as weather forecasts change from week-to-week. “Sweltering” heat in the US Northeast is the latest reason reported for this week’s price rise.

However, it is important to keep in mind that the shifting weather forecasts and related events have kept the market range bound for the last few months, and even if prices do break higher the move is still corrective of the longer-term down trend.

If I sound skeptical of the move up, it is because I am, but as of Wednesday’s close most technical factors indicate $2.95 may be challenged again. These factors show that the key to testing $2.95 is a close over $2.87. This crucial resistance level was tested a few times on Wednesday. It is the 62 percent retracement of the decline from $2.957 to $2.735, near last Thursday’s midpoint, and a confluent projection for the small waves up from $2.735. A close over $2.87 would call for a test of $2.95, which is in line with the 0.618 projection of the wave $2.656 – 2.957 – 2.735.

KaseX’s buy signal (green diamond) is promising and the pullback from $2.87 held the 38 percent retracement of the move up from $2.735. Look for prices to push above $2.87 in early trading tomorrow and to possibly overcome $2.95 in the event that the EIA storage report is bullish.

Near term support is $2.79, the 62 percent retracement from $2.735 to $2.87. This level should hold provided the move up is going to challenge $2.95. A close below $2.79 would shift the near-term outlook to negative and call for $2.73.

By Dean Rogers

Crude oil has taken on a strong bearish tone. There is very little technical evidence, and even less fundamental evidence, that the decline is going to end. However, it is almost always darkest before dawn and there are a few factors that show a correction should take place soon.

Last week’s update discussed major support at $47.0 for WTI and September Brent crude oil is quickly approaching major technical support at $52.8. This is the 1.618 projection for $71.37 – 62.3 – 62.49, the 0.618 projection for $67.49 – 55.6 – 59.9, and the lower Bollinger Band. The KasePO, shown in the middle panel of the chart above, and KaseCD, in the bottom panel, are setup for divergence and nearly in oversold territory. These factors indicate $52.8 is a potential stalling point and that a correction might take place before the decline continues to the next targets.

A normal correction will hold $55.6, the 38 percent retracement from $59.9. Key resistance is $57.2, the 62 percent retracement. We expect $55.6 to hold before the next leg lower takes place.

Natural gas is idling in neutral again and is struggling to overcome key resistance levels. We are still negative for the longer-term, but the near term outlook is looking slightly positive.

The small move up is confirmed by long KaseX signals (green diamonds) on the $0.035 Kase Bar chart. In addition, Wednesday’s close over $2.895, the 1.00 projection for the wave up from $2.785, has opened the way for its 1.618 projection near $2.96. The $2.96 target is crucial because it is the 0.618 projection for the wave up from $2.644. A close over $2.96 would call for an extended correction to targets above $3.00.

Other than the quick move up from $2.644, the recent move up has lacked conviction. A daily evening star setup and hanging man indicates traders are still not quite sure if the market is ready to make the push higher. Tuesday’s $2.84 open is first support, and a close below this would call for another test of the $2.785 swing low.

Prompt month WTI crude oil futures briefly fell below $50.0 on Monday and settled at the lowest level since April 2. The deal with Iran has led to fresh concerns about the global supply glut and most technical factors are negative. RBOB gasoline is lending some support, but on balance, the decline is poised to extend into the mid- and possibly low-$40s where the March 18th low of $42.03 would be challenged.

Prices broke lower out of the near perfect intraday bearish flag discussed last week. September WTI futures, which will become the prompt month on Wednesday, also settled below key support at $50.6 on Monday. This was the 1.618 projection of the wave $64.45 – 57.09 – 62.51. This is likely Wave I of a five wave trending pattern that should unfold to at least $47.0 and possibly $42.5. The five-wave pattern is not perfect, but the close below $50.6 and the bottom of Wave III leaves little room for any other interpretation.

When a five-wave pattern forms at least two of the three impulse waves (I, III, or V) should be equal. At $47.0 Waves I and V will be equal and at $42.5 Waves III and V will be equal. Structurally, both $47.0 and $42.5 fit the structure of the five-wave pattern because $47.0 is the 0.618 projection of Wave III, $62.51 – 50.95 – 54.35 and $42.5 is the 2.764 projection for Wave I.

It is important to note that $42.5 is the lowest that the five-wave pattern projects. Therefore, unless the structure of the wave formation drastically changes, it is not likely that prices will fall below $42.5 in coming weeks.

Odds favor the decline, but the market still seems a bit unsure of itself. As stated, there is some support being wrought by RBOB gasoline, but it ended Monday on a negative note by forming an evening star setup. The move down will likely be a grind and small tests of resistance will be commonplace. First resistance is $51.8 followed by $52.8, which is expected to hold. Key resistance is the $54.35 swing high. A close above this would negative the five-wave pattern and open the way for an extended correction and potential recovery to $59.3 and higher.

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.

August natural gas is attempting to rally above $3.00 after stalling at $2.644 last Thursday. The surge over the last week may be a desperate attempt to push prices to targets above $3.00 before summer’s end, and is being driven by speculation of above normal temperatures through the end of this month and into August.

The near-term outlook took a positive turn Wednesday when prices closed above $2.884, the 0.618 projection of the wave $2.588 – 2.977- 2.644. This clears the way for a rally to the 1.00 projection of $3.03. This is a potential stalling point for the upward correction. A close over $3.03 would call for the $3.20 confluence point with intermediate resistance at $3.11.

Caution is warranted though because it is a bit early to get overly exuberant about a bullish recovery. The balance of bullish and bearish factors is razor thin and shifts day-to-day. The move up is almost certainly corrective of the longer-term decline. Do not be surprised to see prices pull back and settle below $2.82 on Thursday should there be a disappointing EIA storage report. This, in turn, would call for $2.75 and lower.

Brent Crude Forecast: Poised to Test 2015 Low