NY Harbor ULSD Futures Extend Higher

Tag: Price Forecasting

NY Harbor ULSD future’s upward correction extended to 177.7 on Monday. The primary wave 158.9 – 171.7 – 160.5, met its 1.382 projection at 177.7 and is poised to extend to the 1.618 projection of 184.2. This is the decision point for an extended correction and potential recovery. Although it is too early to say that a bottom has been made, a sustained close over 184.2 would open the way for 198.7 and 217.7. A close below 164.3 would indicate the upward correction is complete and call for 153.2 and lower.

To learn more about Kase’s forecasts please visit the Energy Price Forecasts Page.

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Last week’s natural gas price rise was poised to fill December 22nd’s gap from $3.48, but the upward correction stalled at $3.352. The week settled above the $3.09 midpoint of Wednesday, January 12th’s candlestick, leading to speculation that the market might try to rise again early this week. However, Monday’s intraday gap down from $3.056 and settle back below $3.00 was negative for the near-term outlook.

There is still major support at $2.80 that has held so far, but after this morning’s move up stalled and failed to fill to $3.056 gap it looks as though a bearish U.S. Energy Information Administration (EIA) Natural Gas Weekly Update is expected tomorrow.

The key wave for the short-term is $3.352 – 3.024 – 3.228. This wave has already fallen below its 1.00 projection at $2.90 and is poised to meet at least its 1.382 projection at $2.77. This then connects to $2.66 as the 1.618 projection. The $2.66 target is highly confluent for many of the larger and earlier waves down, and is the 0.618 projection for the wave $3.95 – 2.783 – 3.352. The confluence is important because a sustained close below $2.63 would open the way for a decline into the mid-to-low $2’s over the course of the longer-term. Therefore, $2.63 is a potential stalling point for the decline.

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The KaseX indicator on the 240-minute equivalent Kase Bar (KBAR) also confirms the negative outlook and has generated several short signals (purple arrows) during the decline from $3.352. The most recent short signal came after the $3.015 swing high this morning. At this point, there are no warning signals that indicate profit should be taken or that short trades should be exited. This will likely change though should prices recover above the $3.015 swing high.

First resistance ahead of the EIA report is $3.06, which is near the top of the $3.056 gap. A move above this would call for 3.15, which is the 0.618 projection for the wave $2.783 – 3.352 – 2.821. The $3.15 level is confirmed as the 62 percent retracement from $3.352 to $2.821. It is also interesting to note that this morning’s rise to $3.015 stalled just below the 38 percent retracement at $3.02. This is another negative factor.

To summarize, the bias is negative, and the move down is expected to continue. There is strong support at $2.80, but a move below this would call for at least $2.77 and very likely $2.66. Resistance at $3.06 will likely hold, but a move above that would open the way for at least $3.15.

For more information about KaseX please visit our Trading Indicators Page. To take a trial of Kase’s in-depth weekly energy forecasts on natural gas and crude oil please visit the Energy Forecasts Page.


Brent has been trading in a corrective range for the past several days, but fell to major support at $47.7 on Tuesday. This is the 0.618 projection for the wave $52.42 – 48.07 – 50.41. The $47.7 projection connects to a major target at $45.8 as the 1.00 projection. This is also the 1.618 projection for the largest and most important wave down from the $111.38 contract high. KaseX confirms the negative call with confirmed short signals (purple triangles) on the 120-minute equivalent Kase Bar chart.

For more information about KaseX please visit our trading indicators page. The learn about our forecasts please visit our energy forecasts page.

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Natural gas has finally showed some signs of life over the past few days in anticipation of tomorrow’s U.S. Energy Information Administration (EIA) Natural Gas Weekly Update. The short-term charts are showing that traders are anticipating a bullish EIA report, which would be the support the market needs to continue this upward correction. Keep in mind though, this is a correction, and it will likely be predominant in the winter month contracts and short-lived without continued support from external factors.

After oscillating in a sideways range between approximately $2.79 and $3.00 for the past six trading sessions, the February futures contract rose above $3.00 on Wednesday. This is near the $3.176 to $2.783 midpoint of $2.98, which is significant because this is also in line with the 0.618 projection of the irregular wave $2.803 – 3.176 – 2.783. The $1.00 projection of this wave was overcome at $3.15, and the 1.618 projections is $3.38. The $3.38 level is important because it is the 50 percent retracement from $3.95 to $2.783. This level will likely be met, and possibly overcome, upon a bullish EIA number tomorrow.

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In addition, February overcame the crucial $3.176 swing high, and a sustained close over this would confirm the recent bottoming formation (arguably a triple or even quadruple bottom). The projection for this formation is $3.56.

Near-term support is $3.04 and then $2.94. These are the 38 percent and 62 percent retracements of the move up from $2.783 to $3.204 (swing high as of this analysis). These levels are also near the midpoint and open of today’s candlestick. A close back below $3.04 would call into question the validity of the move up. A close below $2.94 would negate the near-term positive tone altogether, and open the way for a continued decline.

The long-term outlook for natural gas is bearish, but the move up over the past two days has shifted the near-term outlook to positive. A close over the $3.176 swing high today will open the way for an extended correction to $3.38 and possibly higher tomorrow.

For more information about Kase’s weekly energy forecasts on natural gas and crude oil please visit our energy forecast page.

Dean Rogers
Senior Analyst
Kase and Company, Inc.

The outlook for natural gas is negative, and without help from external factors the decline will likely continue. However, the market is hesitant to break support at $2.80 in the near-term, and is likely waiting on tomorrow’s U.S. Energy Information Administration (EIA) Natural Gas Weekly Update before it presses higher or continues to decline.

Several positive technical factors indicate resistance will likely be tested before tomorrow’s EIA report. A small intraday double bottom formed at $2.805, as shown on the 120-minute equivalent Kase Bar chart. The confirmation point for the double bottom is $3.176, which is in line with the 1.00 projection for the wave $2.805 – 3.176 – 2.811. Immediate resistance is $3.04, the 0.618 projection. A move above $3.04 would call for $3.176 to be challenged, and a close over $3.176 would confirm the double bottom. This would then open the way for an extended correction to targets between $3.18 and the double bottom’s $3.54 target (calculation is 3.176 + (3.176 – 2.805) = 3.537). A move of this magnitude will not likely take place without major support from bullish external factors.

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Should $3.176 hold, the move down will likely extend. First support is $2.89, and a close below this would call for a key target at $2.79. This is the 0.618 projection for the wave $3.176 – 2.811 – 3.012. A close below $2.79 would negate the double bottom and open the way for targets in the mid $2s.

Overall, the outlook is negative, and the move down is still favored. However, the double bottom, a daily morning star setup, and deeply oversold conditions, all indicate that a correction may take place very soon, and could be spurred by tomorrow’s EIA report.

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The NY Harbor ULSD futures broke lower out of a bearish flag formation on Monday. The break lower was anticipated and then confirmed by KaseX short signals. The decline is now poised to extend to at least 188.9 and then 177.9. The latter is crucial because a close below this would call for 164.1 and 151.9. Initial resistance is the small intraday double top at 199.39. A close over this would open the way for an extended correction to 210.9 and possibly 226.0.

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For more information about Kase’s weekly energy forecasts please click here.

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Kase’s senior analyst Dean Rogers reviews trade setups and price forecasts for e-mini S&P 500, AAPL, and MSFT, using Kase Wave Analysis and Kase StatWare.

http://youtu.be/SZ-ipWldKTc

Coming into this week there was an outside chance that Brent would hold $67.0. However, prices settled below $67.0 on Monday. There is immediate support at $65.2 as discussed in this week’s Crude Oil Commentary, but the decline is now poised for at least $62.8 and likely $58.5 before a measurable retracement takes place. The key target is $58.5 because it is the most confluent wave projection and the equal to (1.00) target for the wave $112.59 – 83.41 – 88.42. A sustained close below this will open the way for $53.8 and $48.7.

There is very little evidence that the move down is going to end at this time. Prices are still deeply oversold and overdue for a correction, but until at least initial resistance at $70.5 is overcome, the move down is favored. Next resistance is $72.1, and a close over the this would call for and an extended correction to $75.1 and possibly $79.8.

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