Price Forecasting Archives - Page 29 of 32

For the past few weeks WTI crude oil prices have risen significantly, and for the first time since early December 2014 prices closed above $60.0 last week. However, many traders are questioning the long-term validity of the price rise continuing due to concerns of a persistent supply glut, and the technical factors show that the market reached a crucial decision point at $62.58 last week.

The June WTI futures contract met crucial resistance at $62.58 on Wednesday, May 6, and as called for in our weekly Kase Crude Oil Commentary, prices have begun to pullback in a corrective manner. The correction is taking place after a blow-off high and evening star setup formed that same day. The evening star (some might say shooting star) was both completed and confirmed on Thursday when prices closed below the midpoint and open of Tuesday’s Harami bar. In addition, bearish divergences on the KaseCD and KasePO were confirmed on Friday. The combination of negative short term technical factors indicates the downward correction should extend and will likely form Wave IV of a longer-term five wave formation that projects to target in the mid-to upper $60s and even the low $70s.

We expect the pullback to challenge at least $56.2. This is the 38 percent retracement of the move up from $45.93 and is near the bottom of the sub-wave 4 of III. If prices are going to extend to new highs in the next week or so, $56.2 must hold. Otherwise, a close below $56.2 would call for the 50 and 62 percent retracements at $54.3 and $52.3. For now, it looks as though $56.2 will hold. The long-term outlook would only shift back to being bearish upon a close below $52.3. We do not expect to see a decline of that magnitude.

Today’s decline was nominal, so the next few days will be crucial for the near-term direction. A close over last Thursday’s $59.82 midpoint would shift the near-term outlook back to positive, call for another test of $62.5, and likely open the way for the five-wave pattern to unfold to upper targets of $66.8 and $71.5 over the course of the next few months.

Take a trial of Kase’s weekly crude oil forecasts to receive more in-depth analysis every week.

It is hard to deny the strength of the natural gas price rally over the past two weeks. Last week’s bullish engulfing line, April’s bullish hammer and morning star setup, and bullish daily divergences on the KasePO, KaseCD, MACD, RSI, and Stochastic are all technical evidence that the move down may finally be complete. However, many traders are skeptical of the move up and are asking what fundamental factors would support a recovery over the course of the longer-term. It is a fair and accurate question. Tomorrow’s U.S. Energy Information Administration (EIA) Natural Gas Weekly Update should provide a strong clue regarding the potential strength of a continued natural gas price rise.

In addition to the aforementioned bullish technical factors on the monthly, weekly, and daily charts, the short term technical factors and wave formations show evidence for a move to at least $2.93. This is a decision point because it is the 2.764 (XC – shown in red) projection for the wave up from $2.481, the 1.00 (E – shown in pink) from $2.557, and the 1.618 (L – shown in purple) from $2.747. In addition, $2.93 is the last level protecting mid-March’s $2.982 swing high. A sustained close over this would open the way for an extended move to targets above $3.00. However, $2.93 will not likely be tested until after tomorrow’s EIA report, if at all, because most traders are waiting for confirmation from another lower than expected build.

There is good reason to be suspicious of this move up, and a disappointing EIA report tomorrow could be the catalyst to turn prices lower again in very short order. Therefore, until there is a sustained close over $2.93 caution is warranted.

The daily chart has formed a hanging man and evening star setup as of this mid-day analysis, and a close below Monday’s $2.78 midpoint would complete the pattern. This would then open the way for $2.65, the 50 percent retracement of the move up and last week’s midpoint. A close below $2.65 would confirm the move up is over and most likely point toward the market settling into a trading range while it sorts itself out.

Request a trial of our weekly energy forecast on natural gas to learn more.

Brent crude oil prices will likely test a key decision point at $68.0 this week. This is the 1.00 projection for the wave up from $50.1, and a confluent projection for the sub-waves up from $53.63. A close over $68.0 would confirm that a long-term bullish recovery is underway. Narrowing calendar spreads support the move up, but are still wide by historic standards. First class long permissions (blue dots) on the KEES indicator also confirm the positive tone.

That said, momentum is waning on the KaseCD and is setup for a bearish divergence (higher high in price with lower high in momentum). The KasePO is quickly nearing overbought territory. There are also a daily bearish hanging man and evening star setup. These and a few other negative factors tell us that Brent will likely stall at $68.0. We expect to see a significant correction take place to test the mettle of the market before the move up extends much higher than $68.0.

To learn more, take a trial of Kase’s weekly crude oil forecast.

For the second week in a row natural gas futures gapped lower on Monday. This might be an exhaustion gap, which in many cases signals the end of a long and drawn out trend. The top of the gap at $2.555 has been overcome as of Wednesday midday, and a close over this would call for an extended correction to at least $2.67, the top of last week’s gap and the 38 percent retracement from $2.982. These technical factors could be an early warning that a bottom has finally been made.

That said, we think it is premature to definitively state the bottom has been made. We will hold off on delving too deeply into that conversation until at least $2.67 is overcome. Most technical and fundamental factors are still negative, and while we do think the market is nearing a bottom, most evidence points to a target about 10-15 cents lower. The June contract met confluent support at $2.48, but the key objective that we have identified for weeks in our detailed natural gas forecast has not been met yet. A close back below $2.555 before the end of the week would signal that the upward correction has failed again.

Request a trial of our weekly energy forecast on natural gas to learn more.

June WTI crude oil has oscillated in the range of a broadening wedge over the last eight trading days. The pattern is bullish, but the euphoria of WTI’s recent price surge is waning. Mixed technical and fundamental factors indicate the pattern will fail if the $58.41 swing high is not overcome soon.

Key technical support for the near term is $55.3 because it is the 1.00 target for the wave down from $58.82, and intersects with the lower trend line of the expanding wedge. This wave stalled at its 0.618 projection of $56.5, so the market is sitting on the teetering edge of a decline to $55.3 or push higher to overcome $58.41. A close over $58.41 would confirm a break higher out of the wedge and would open the way for an extended upward correction. A move below $56.5 would open the way for $55.3 to be challenged. Overall, odds are still slightly in favor of the move up and a break higher out of the wedge, but a close below $55.3 would indicate the pattern has failed.

For more detailed weekly analyses of WTI, Brent, and Natural Gas please take a trial of the Kase Energy Forecasts.

Natural gas futures nearly filled Monday’s gap down from $2.625. This is crucial resistance because it is near the 38 percent retracement from $2.949 and the confirmation point of April 15th’s morning star. A close over $2.625 would call for the upward correction to extend and challenge key resistance at $2.77. We still think resistance will hold, and a move below the $2.533 swing low will shift odds strongly back in favor of challenging the $2.475 low again.

For a more in-depth natural gas forecast please take a trial of Kase’s Natural Gas Commentary.

NY Harbor ULSD May futures fell to 187.35 on Monday, but the decline is corrective and forms an intraday bullish pennant (not shown). Support at 182.7, the 38 percent retracement from 166.53 should hold, though an extended correction to the 62 percent retracement at 176.5 would not be out of the ordinary at this point. A close over 190.9, the 1.618 projection from 164.9 would confirm the short-term positive tone and call for a split target at 205.0. This is the 2.764 projection from 164.9 and the 1.00 target from the 155.66 low, and is the most likely stalling point.

Take a trial of Kase’s weekly energy forecasts.

May natural gas futures stalled at $2.475 after meeting the 0.618 target for the wave $2.949 – 2.583 – 2.719. A close over $2.576 will complete the bullish morning star and a close over $2.624 would confirm it. In addition, the confirmed bullish KaseCD divergence and second class long KEES permissions indicate the upward correction should extend. A normal correction will hold the 38 percent retracement from $2.949 at $2.66. An extended correction is expected to hold $2.77, the 62 percent retracement.

Take a four-week trial of the Kase Commentary on Natural Gas.

Since mid-March prices for the May RBOB Gasoline futures contract have oscillated in a narrowing range and formed a coil pattern. Coils are patterns that indicate market indecisiveness, which has definitely been the case for the entire crude oil infrastructure since the beginning of the year. Coils are not as reliable as flags, pennants, and wedges at predicting the direction of the breakout, coils do tend to break in the direction of the trend, in this case down.

On Monday, the upper trend line of the coil was tested and held. Prices fell at the end of the day, and the evening star setup that formed indicates a test of support and the lower trend line of the coil should be tested later this week.

A close below 172.7, the 0.618 projection of the wave down from 197.95 would open the way for at least 161.7 and possibly 150.7 as he 1.00 and 1.382 projections, respectively.

A close over 185.0 would indicate prices have broken higher out of the coil and call for another test of crucial resistance at 197.3, which is the 0.618 projection of the wave up from 152.34.

Learn more about Kase’s weekly energy forecasts.

From day-to-day natural gas prices are oscillating back and forth on short term speculation and headlines. At one moment we read that the weather forecast is cooler than normal for the next few weeks and then a headline says the forecast is normal. In addition, rig counts are down, but the rate at which they are declining is leveling off. Storage levels are high, and government data shows that production is on pace to increase by five percent this year. The point is that it is hard to get a handle on the fundamental factors right now, and that is fairly typical for this time of year in the shoulder months between the break of the winter heating season and summer cooling demand. However, during this time the technical analysis factors can tell us a lot about how events may unfold, especially for the near term.

The natural gas forecast looks weak ahead of tomorrow’s U.S. Energy Information Administration (EIA) Natural Gas Weekly Update. Prices are falling again after last Thursday’s four percent gain ahead of the long weekend. Thursday’s move formed a daily bullish and engulfing line, weekly bullish piercing pattern, and confirmed a daily divergence on the KasePO. However, the inability to follow through this week, and the potential for a close below Thursday’s $2.657 midpoint today, does not bode well for an extended upward correction before new contract lows are made.

As it stands, the wave formation down from $2.949 calls for $2.49 once natural gas prices close below the $2.56 target. A close below $2.56 and decline to $2.49 and lower is the most likely scenario that will unfold, unless there is another bullish shock from this week’s EIA report.

Overall, most factors for the short term are negative. Momentum on the KasePO is declining, and a new swing low below $2.583 would negate the bullish divergence. The KaseCD is also declining, but is setup for a mini-divergence between the $2.633 and $2.613 swing lows, so caution is warranted. The KEES indicator is showing strong first class short permissions (magenta dots) on the 240-minute Kase Bar chart, and a short trade was triggered this morning when the red S formed.

A close below last Thursday’s $2.657 midpoint would certainly increase the odds of a decline to $2.56 tomorrow. However, a move back above this at the end of the day today would increase the uncertainty of a continued decline and could open the way for $2.72 to be challenged again. This is the key resistance level for the near term, and a move above this would call for an extended correction. This is a less likely scenario, but is not unlikely.

To conclude, the market knows what its support and resistance levels are and the near term direction will be decided by a close beyond these levels. A close below $2.56 will call for at least $2.49. Conversely, a move back above $2.657 would call for another test of major resistance at $2.72.

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Technical Factors Call for WTI Crude Oil Correction to $56.2

Tag: Price Forecasting