Technical Analysis Archives - Page 46 of 60

By Dean Rogers

March WTI pulled back from its $31.53 swing high made in early trading Tuesday after several nations, including Saudi Arabia and Russia, agreed to freeze production at current levels.

While this might be a step in the direction of a long-term recovery, halting output at current levels would do little for a market that is already oversupplied.

In addition, and most importantly, the deal is strapped with a major caveat: Iraq, Iran, and other large producers would also have to halt production increases. Reports indicate that Iran has balked at the idea of halting production levels as they aim to return their output to presanctions levels.

Regardless of the reasons for the move up, from a technical standpoint, the outlook for oil remains weak. WTI was due for a correction when the 1.382 projection of the wave $34.82 – 29.4 – 33.6 was met at $26.05. There were also plenty of positive technical factors leading into the correction. However, the move up stalled at $31.53 when several intraday momentum indicators, including KaseX, triggered overbought signals. In addition, $31.53 was near the 62 percent retracement of the decline from $34.82 to $26.05.

Prompt month March futures have already retraced 50 percent of the move from $26.05 to $31.53. March is now poised to test support at $28.3. This is Friday’s midpoint and near the 62 percent retracement. A close below $28.3 would call for $27.3, Friday’s open, and then $26.7, the last target protecting the $26.05 low.

There is an outside chance that the move up could continue, and corrections of such a swift decline are bound to take place. Prices must overcome at least $30.5 to show the upward correction will possibly extend to $32.1 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 in learning more, please sign up for a complimentary four-week trial.

By Dean Rogers

Forecasts for freezing temperatures this weekend in the eastern U.S. have had a minimal impact on natural gas prices this week. Many traders are looking ahead to above normal temperatures in coming weeks. In addition, many speculate that Thursday’s EIA Natural Gas Storage Report will reflect the smallest withdrawal from storage for this time of year since 2012.

The negative sentiment is being reflected on the charts too. March natural gas is continuing to grind its way lower to targets below $2.00. Monday’s gap from $2.076 stalled at $2.172 and was quickly filled on Tuesday. Subsequently prices have fallen to $2.017 so far.

The move down will likely continue to be a grind. March has struggled to close below the psychologically important $2.00 level in recent weeks. That said, prices should fulfill targets below $2.00 as the waves down from $2.493 and $2.315 project to $1.95 and $1.90. We expect that these projections will be met before another significant correction takes place.

Look for resistance at $2.10 and $2.18. The latter is key because it is the 62 percent retracement from $2.315 to $1.954 and is in line with the $2.172 swing high.

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

Fears of a persistent supply glut still weigh heavily on the minds of traders. In addition, media reports stated that last week Saudi Arabia slashed prices on its highest-quality crude oil destined for Europe and Asia. Some are interpreting this as a signal that Saudi Arabia is still willing to deal with low prices, therefore, production cuts will not take place any time soon. A weaker U.S. dollar could support WTI, but the charts tend to indicate key support will be tested in coming days.

Last week’s brief rally on Wednesday was reportedly fueled by the declining dollar. However, the move stalled on Thursday and prompt month WTI futures have fallen to $29.57 so far. This is just above crucial support at $29.4, and the near-term outlook hinges on whether or not this objective holds.

A move below $29.4 would take out the wave $27.56 – 34.82 – 29.4 and its potential to extend to $33.9 and higher. In addition, a close below $29.4 would call for at least $28.2, the last support level protecting the $27.56 contract low. Odds favor a decline to $28.2 because prices have already closed below the 0.618 projection of the wave down from $34.82.

That said, the move down will continue to be a grind. Resistance at $30.8 and $31.4 may be challenged before prices fall below $29.4 and extend to $28.2. We expect the latter to hold. A close over $31.4 would call for $32.8, which then connects to key resistance at $33.9.

By Dean Rogers

Many have already thrown in the towel on the prospects of a continued winter rally for natural gas. The negative sentiment was reflected on the charts earlier this week when prices plummeted from $2.315 after breaking higher out of the recent trading range between $2.08 and approximately $2.20. Trading will likely remain volatile, and yes, we should see a few more tests of resistance (as soon as tomorrow) as shifting weather reports predict potential cold spells in coming weeks. However, for now, and for the foreseeable future, this is still a bear market.

The majority of technical factors are negative and March natural gas finally closed below $2.08 support on Tuesday. Ultimately, the decline is poised to continue to at least $1.91. This is near the 1.00 projection of the wave $2.493 – 2.08 – 2.315, and is in line with the $1.91 contract low. First support is $1.99, and a close below this would indicate today’s small upward correction is over.

That said, there are a few factors that indicate today’s correction could extend before prices fall to $1.90. The psychologically important $2.00 level has held on a closing basis, and today’s price action formed a bullish Harami line and star setup on the daily chart. Resistance at $2.10, and maybe $2.18 could be tested first, though we expect the latter to hold.

By Dean Rogers

Last week, speculation that a possible meeting next month between Russia and OPEC to discuss production cuts fueled WTI’s price rise. This would be the type of transition that needs to take place for oil prices to recover over the course of the long-term. However, many are skeptical, and some reports indicate that this may be nothing more than verbal attempts to keep prices from aggressively sliding lower.

The market’s hesitance to push higher became evident on Thursday when March WTI stalled just above the $34.4 projection of the wave $27.56 – 32.74 – 29.25. The pullback from $34.82 formed a blow-off high and Friday’s evening star setup was confirmed by Monday’s decline. WTI has already retraced nearly 50 percent of the move up, and is poised to continue its decline.

The move down has been confirmed by KaseX sell signals (purple diamonds), and WTI is now sitting just above crucial support at $31.1. This is a highly confluent wave projection and retracement. A close below $31.1 would call for $30.3, and at best, would indicate prices are going to settle into a trading range while the market sorts itself out. Given the magnitude of Monday’s decline, WTI could be hard pressed to hold $31.1 and $30.3.

Trading has been erratic over the past two weeks, and last week prices also pulled back significantly to test support at $29.25 early in the week. There is an outside chance that the move up will continue, but for now, we expect that Monday’s $32.7 midpoint will hold. A close over $32.7 would call for $33.5 and possibly $34.4 again.

By Dean Rogers

WTI’s rally from $27.56 late last week was sparked by a few positive technical factors such as a daily bullish engulfing line and momentum divergence. These are factors that would normally accompany a major turn. The move up was a bit over exuberant though, and has stalled at $32.74. Major support at $29.6 is already being tested, and it looks like the rally might be short lived.

Technicals will generally lead the way when a turn is taking place. However, markets, especially the energy markets, have a propensity to overcorrect after being so deeply oversold. To sustain the move higher a shift in the underlying fundamentals must take place. Given today’s pullback, it looks like the market is doubtful that will be the case. The move up is not doomed (yet), but major support is being already being challenged.

The rise from $27.56 unfolded as five-waves that stalled at $32.74, the trend terminus (Y^3/X^2) of Wave I. The decline from $32.47 might be a three-wave correction. However, prices are testing major support at $29.6. A close below $29.6 would call for $28.6 and then a retest of the $27.56 low.

Give the confluence of support at $29.6 a test of resistance could take place early tomorrow. First resistance is $31.1. However, WTI will need to close over $31.8 to have a shot at moving higher again later this week.

By Dean Rogers

S&P 500 Index (SPX)

It has been a rough start for investors and the stock market so far this year. Falling oil prices and a weak economic outlook for China have soured the outlook for global markets and have indices across the world testing major support.

The technical outlook for the S&P 500 Index is negative. The index fell below its late August 2015 1867.01 swing low and has challenged major support at 1842 for the past few days. A few weeks ago we call for the S&P to test 1842 because of its confluence as a projection for major waves down from 2134.72 and 2116.48. This extremely important 1842 target was taken out by the 1812.29 swing low, but the index has not settled below 1842 yet.

Daily S&P 500 Index with KaseX

The 1842 target has been adjusted to 1845 based upon the new wave formations and retracements. A sustained close below 1845 could open the way for the decline to continue to at least 1771 and ultimately 1688 as indicated in the table below.

The confluence of 1842 makes it a potential stalling point, and at minimum, a correction will likely take place before the move down continues. Resistance at 1910 should hold, but the key level for the near-term is 1938. A close over 1938 would not mean that the move down is over, but would rather call for an extended upward correction to 1986 and possibly 2056. A close over the latter would be bullish for the long-term outlook.

10-Year T-Note Futures (TY)

As stock prices have fallen some monetary funds have been shifting into fixed income. As a result, 10-Year T-Note futures have risen substantially in recent weeks. The move up is poised to continue, but several negative technical factors indicate a correction should take place first.

An important resistance level at 128’19 was overcome earlier this week. This was the 0.618 projection for the wave 124’19 – 130’00.5 – 124’14. Kase’s wave analysis studies show that once the 0.618 projection is met most waves will extend to at least the 1.00 projection, in this case 130’17. This is near our model’s confluence point of 130’0 and the most recent major swing high. A sustained close over 130’0 would call for 131’20 and very likely 132’16.

The retracements of the move up from 125’14 to 129’08 define crucial support levels in coming weeks. As stated, a correction is expected, and a normal correction should hold 127’25.5. A close below this would call for an extended correction to key support at 126’25.5. If the move up is going to have any chance at continuing in coming weeks 126’25.5 must hold.

Daily Continuation 10-Year T-Note Futures with KaseX

These are brief technical analyses based upon Kase’s technical forecasting models and trading indicators KaseX and Kase StatWare. If you are interested in taking a trial of KaseX or Kase StatWare please contact sales@kaseco.com. We would love to get your thoughts about the forecasted targets and probabilities. Leave a comment or send them along with your request for a trial to sales@kaseco.com.

By Dean Rogers

Natural gas fell back into the trading range between $2.23 and $2.39 where it spent the first week of the new year. This comes after the failure to extend to the 0.618 projection of the wave $1.802 – 2.386 – 2.188. There is still an outside chance the move up will extend to $2.56 while $2.188 holds, but overall, the charts do not look good and odds favor a decline to test major support.

The move down from $2.495 broke down into five waves that terminated near $2.241. Today’s small move up to $2.323 was the type of three-wave correction that would be expected after a five-wave pattern. This keeps short-term odds in favor of the decline below key support at $2.23. Upon a close below $2.23 look for $2.17, the 0.618 projection of the wave $2.495 – 2.241 – 2.323. This then connects to $2.07 as the 1.00 projection. These are also the 50 and 62 percent retracements of the move up from $1.802 to $2.495, respectively.

Today’s Harami line and star setup is positive, but the star’s blow-off high dampens the likelihood of a turn higher tomorrow. A surprise bullish withdrawal reported by the EIA tomorrow morning could push prices higher, but based upon the price action for the past few days it looks as though most market participants expect the decline to continue.

By Dean Rogers

China’s stock market plunge wreaked havoc on stock and commodity prices around the world last week. Fears of a further slowing economy in the world’s largest energy consumer along with weak manufacturing demand and the deepening global supply glut have recast a negative outlook on oil prices. The negative sentiment has been reflected in the technicals too as prices continue to fall.

February WTI fell to $30.88 on Monday and came close to meeting a crucial confluence point at $30.6. This is near the 0.618 projection of the wave $38.39 – 32.1 – 34.34, and is the last support protecting against a decline into the $20s. A close below $30.6 would call for at least $29.0 and likely $28.1. The latter is the 1.00 projection for the wave down from $38.39.

The KasePO PeakOut (green P) indicates Monday’s $32.2 midpoint might be tested early Tuesday, but we expect this level to hold. Other than the intraday PeakOut there is little to no technical evidence that the decline is going to stall. Therefore, without some type of unexpected shift in the underlying fundamentals and/or technicals we expect to see prices fall into the $20s soon.

S&P 500 Index (SPX)

By Dean Rogers

The slowing Chinese economy, lackluster manufacturing data, and a weaker yuan have sent Chinese stocks tumbling in the first week of 2016. China’s stock market has been halted twice this week when volatility limits were reached and is down seven percent over the last few days. The selloff has spilled over into global markets as the Dow Jones Industrial Average and S&P 500 Index are off to their worst starts for a year ever.

The S&P 500 Index (SPX) charts reflect the near-term negative tone. Several factors indicate the decline should challenge support levels below August’s 1867.01 low at 1842. This will be a crucial decision point for a much more bearish outlook and sustained decline over the next several weeks and possibly months.

The table below shows SPX targets and resistance levels and the associated probabilities for meeting those targets and levels within the next 10 trading days. Kase’s technical forecasting models indicate odds are 80 percent for at least 1900 and 65 percent for 1842. The latter is the bearish decision point and will probably hold, at least initially.

January 7’s close below the 62 percent retracement of the move up from 1867.01 to 2116.48 has shifted odds in favor of a continued decline. In addition, the 0.618 projection of the primary wave 2134.72 – 1867.01 – 2116.48 has been taken out by January 7’s close. Waves that close below the 0.618 projection generally extend to at least the 1.00 projection, in this case 1842 (+/- 7 points). Therefore, the SPX should fall to 1842 before a significant upward correction takes place. A close below 1842 would call for 1744 as the 1.382 projection for the wave down from 2134.72 with an intermediate confluence point at 1788.

SPX Daily with KaseX

First resistance is 2006, the 38 percent retracement of the decline from 2116.48 to 1938.83. This level will most likely hold upon a correction. The key level for the near term is 2048, the 62 percent retracement. A close over 2048 would indicate the move down is most likely over and that the SPX will push towards at least 2093 which connects to 2184. A close over 2048 has 35 percent odds and a close over 2093 has 20 percent odds.

KaseX confirms the move down on the weekly chart. The recent overbought signal (gray arrow) and unfiltered short entries (pink triangles) indicate the decline should continue. On the daily chart, for those that are not already short, KaseX shows that it would be prudent to wait for a pullback and another confirmed sell signal (pink or purple triangle) after the recent short warning (yellow triangle).

SPX Weekly with KaseX

With all factors considered, the move down should continue and test the 1842 decision point in coming weeks. There is not enough technical evidence yet to definitively state that 1842 will hold. However, because of its importance, at a minimum, we expect at least a small upward correction to take place from 1842 once this target is met. Sustaining a close below 1842 would be extremely bearish for the long-term and could be the precursor to a bearish 2016.

This is a brief technical analysis of the S&P 500 Index based upon Kase’s technical forecasting models and trading indicator KaseX. If you are interested in taking a trial of KaseX please contact sales@kaseco.com. We would love to get your thoughts about the forecasted targets and probabilities. Leave a comment or send them along with your request for a trial to sales@kaseco.com.

Crude Oil Forecast: WTI Pulls Back After Talks of Output Freeze

Tag: Technical Analysis

S&P 500 Index (SPX)

10-Year T-Note Futures (TY)

S&P 500 Index (SPX)

SPX Daily with KaseX

SPX Weekly with KaseX