Technical Analysis Archives - Page 47 of 56

By Dean Rogers

Unseasonably warm weather for early September has supported prices in the prompt month and prices were trading in a tight range between $2.64 and $2.725.

Late Wednesday afternoon October natural gas finally broke lower and a new contract low was made. In addition, the winter strip also fell to new lows again confirming the negative outlook.

Look for at least $2.59 ahead of tomorrow’s EIA storage report and possibly $2.53 before the end of the week.

Trading will remain choppy, so another test of $2.72 and possibly $2.77 is not out of the question. We expect $2.77 to hold. A close over this would call for an extended upward correction.

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 Cynthia A. Kase

Read on TraderPlanet.com

Six big firms dominate the agricultural supply business today, having bought up over 200 smaller companies and their intellectual property over the past 25 years or so. Monsanto, the world’s largest seed supplier, and BASF both reportedly tried to buy rival Syngenta. Though no deals went through, it looks like the industry is in for another round of consolidation. One of Monsanto’s problems is that weeds are becoming resistant to its star product, Roundup, and commodity prices are down, reducing farmers’ ability to pay for its goods. A merger would help by giving it economies of scale which could improve its both prices and its pace of innovation.

The Monsanto stock price itself is now about 30 percent off its post-recession $128.79 high. Is Monsanto stock in the weeds or will it round UP?

Analysis

I’m biased to the downside primarily for these bearish reasons. The last four days, following last Wednesday’s big up day, have been stars, or small open-close range days. There was a possible breakaway gap down this morning. Kase’s daily upper stop has held. Momentum is non-divergent. The two most recent signals on KaseX, purple diamonds, were sell signals. All these are shown in the chart below.

If the $10 recovery lengthens, it’s no big deal if $98 is tested. The price to watch is $101. There’d have to be a three sigma move of the daily double TrueRange for $101 to be hit. This is also the minimum, 0.62 extension for the bounce from $89.34 to $99.48, and the midpoint of the candlestick for the week ending August 7. Above this, there’s heavy resistance in the $105 to $107 area, but odds then swing in favor of a recovery right back to May’s highs of $123 plus.

The decline to $89.34 was about $0.75 shy of $88.6 support, which must be clearly broken for a continuation lower. $88.6 is the 1.62 extension for the major recent wave is 128.79 – 105.76 – 126.0, and the 1.38 extension for the first wave down from $123.82. The trend terminus for both these waves is $71.25. Importantly, the correction from $89.34 to $99.48 targets $88.6 as the Phi-cubed projection. $88.6 is Kase daily DevStop2 and weekly DevStop1, so it is confluent statistically.

It’s not unusual for trending patterns elongate in such a way as to stretch key targets to more extreme levels. This is what’s happened for Monsanto. After falling from $128.79 to $105.76 in 2014, prices recovered to $126 earlier this year. Waves down from $126 have pushed the major downside target to$86.7. This is the “trend terminus” for the wave from $126.0 to $111.16, and the 1.0 extension from $126.0 to $103.14. Very importantly, $86.7 is the 50 percent retracement of the entire move up from the recession low of $44.61.

Outlook

Structurally, there’s a reasonable chance for $86.7 holding support, otherwise, I’d look for a free fall to $71.25. Below that don’t get lost after landing in the weeds!

Send questions for next week to askkase@kaseco.com, and click the link learn more about KaseX and the Kase DevStops.

By Dean Rogers

Many market participants are skeptical of Brent’s meteoric rise over the past three days. However, there is no denying the positive technical factors that indicate a bottom has likely been made. The monthly morning star setup and hammer, weekly bullish engulfing line, and daily three white soldiers candlestick patterns are reliable reversal patterns. KaseX also triggered reversal signals (gray arrows) early last week.

Brent is on the teetering edge of confirming a sustained bullish outlook and has risen to the 50-day moving average at $54.47, the 38 percent retracement from $71.68, and the upper standard deviation band. A close over $54.5 will confirm a positive outlook and call for $55.4 and higher.

That said, because of the confluence of technical resistance at $54.5 this is a very likely stalling point. We expect a test of support at $51.9 within the next few days and likely before Brent closes over $54.5. A close below $51.9 would call for $50.6 and $49.7. The latter must hold for the near-term outlook to remain positive.

This is a brief Brent oil forecast 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

It has been a wild week on Wall Street and for markets around the world. Global equities have ridden a roller coaster in the U.S., Asia, and Europe, the U.S. Dollar strengthened a bit after a tumultuous decline, and oil is trying to find its bottom after a significant rally to $42.86 from our weekly commentary’s $37.9 target.

U.S. 10 Year Treasury bonds have come along for the ride and have fallen to 127’18 so far after stalling at 129’28. The 129’28 high was just above our June 30, 2015 projected resistance of 129’16.5. At this point, as shown in the chart below, bearish momentum divergences formed when rising price highs were accompanied by falling momentum highs on the KaseCD, MACD, and slow stochastic.

The divergences show that the decline will likely extend. However, there are several positive technical factors that indicate an upward correction should take place first.

The daily candlestick chart above shows a morning star setup that formed on August 27. The confirmation point (open of August 26) is 128’18. This resistance level is also in line with the 38 percent retracement of the decline form 129’28 as shown in the chart below. Should the decline extend as expected over the next few days, 128’18 must hold. A close over this would call for 128’31.5, the 62 percent retracement.

The wave formation down from 129’28, shown in green below, met the 0.618 projection at 127’18. Most waves (our studies show around 77 percent) that meet the 0.618 projection extend to at least the 1.00 projection, in this case 126’27. Therefore, odds favor at least 126’27. This is in line with the 62 percent retracement of the move up from 124’29 as shown in the daily chart (in blue). A close below 126’27 would call for 126’08 and 125’26.

In summary, for the near-term, these technical factors indicate U.S. 10 year treasuries should decline to at least 126’27, but that a small correction to 128’18 might take place first. The longer-term targets are discussed in our original article published June 30, 2015.

The Shanghai Composite Index met support at 3000. A small correction might take place, but overall odds favor at least 2300 before a bottom is made.

By Dean Rogers

Natural gas continues to hold the lower end of the trading range between $2.65 and $2.95 on a closing basis. October natural gas futures stalled at $2.641 and subsequently formed a bearish flag (blue trend lines). Flags are generally a reliable type of continuation pattern, which means the flag should break lower soon. The next targets are $2.62 and $2.55.

A daily morning star setup (not shown) indicates the upward correction may extend. Resistance at $2.75 should hold. This is the 38 percent retracement from $2.959, the 62 percent retracement from $2.816, and the 1.382 projection of the wave up from $2.641. A close over $2.75 would confirm the morning star and call for an extended correction $2.80 and possibly $2.85.

Overall, our bias remains negative. Therefore, even if prices rose to test resistance we expect $2.75 to hold and for natural gas to continue its decline.

By Cynthia A. Kase

Read on TraderPlanet.com

Clearly US Stocks have been declining as the drop in demand in China has finally hit hard. It’s easy to sustain robust growth from a low base, but as an economy grows, that becomes more difficult, as China’s machinations show. The spillover to the Dow Jones Index has been evident since mid-May as its been oscillating in a downward pattern since then, bouncing down the cliff, as anyone paying attention will have seen. US Stocks have now rolled off the cliff edge. Now what? Continue reading US Stocks Rolled Off Edge Of Cliff: Now What?

By Dean Rogers

Technical analysis provides traders and market analysts with extremely valuable tools that can help determine future support and resistance and major turning points. A good example of this came from our recent article Ask Kase: How to Trade the Shanghai Index that was published on June 9, 2015 by Cynthia A. Kase, CMT, MFTA. Ms. Kase’s analysis lead her to call for an overdue downward correction of the Shanghai Composite Index (SSE) once resistance at 5200 was met within a +/- 50 point tolerance. SSE rose to 5178.19 on June 12, before turning lower and eventually transitioning into the bearish collapse that has transpired over the past several weeks.

The market has blown through Ms. Kase’s lowest support level of 4550, below which she stated, “a much more sustained decline would commence”. She hit the nail on the head, and now, the techncials are showing us that SSE is poised for at least 2300 after a potential upward correction from 2947.94.

The decline from 5178.19 forms a very clear nested wave formation that has two primary waves: 5178.19 – 3373.54 – 4184.45 (blue) and 4184.45 – 3537.36 – 4006.34 (green). Both waves project to 2300 +/- 80 points. This is a very important target and potential bottom for SSE because it is the 1.00 projection for the wave down from 5178.19 (blue) and the 2.764 projection for the wave down from 4184.45 (green).

A sustained close below 2300 would call for a much more severe collapse to 2034, 1710, and possibly 1275.

As stated though, an upward correction might take place from 2947.94 before the decline continues. This is because both of the waves down from 5178.19 and 4184.45 met crucial projections around 3000. The 3000 level was also in line with the 62 percent retracement of the move up from the October 2008 swing low of 1664.93 to 5178.19.

To say the least, 3000 is important support, so a small correction to 3350, the 38 percent retracement of the decline form 4006.34 would be normal.

Retracements to 2947.94

Key resistance for the near term is 3585, the 62 percent retracement from 4006.34 and the 50 percent retracement from 4184.45. A close over 3585 would open the way for 3755, the 62 percent retracement from 4184.45 and the 38 percent retracement from 5178.19. This is the level that must hold for the outlook to remain negative for at least the next few weeks.

A daily morning star setup (not shown) confirms that the upward correction might take place within the next few days. However, most momentum indicators show that a pullback will be nothing more than a temporary correction.

The weekly stochastic moved below 20 and is oversold, but it can remain there for weeks (or even months) before the index reverses significantly higher. All other momentum indicators, including the KaseCD and KasePO show declining momentum, which does not bode well for the formation of a bottom soon.

In summary, most technical factors are negative and odds favor a decline to at least 2300. A pullback from 2947.94 might take place first, but weekly and daily momentum indicators show that such a move will likely be corrective and should hold resistance at 3350 and no higher than 3585. Therefore, for now, buckle in for the rest of the ride lower.

Learn more about Kase’s trading indicators such as the KasePO and KaseCD, weekly crude oil and natural gas forecasts, and other services, at www.kaseco.com.

By Dean Rogers

On Friday evening I sat down to write Kase’s detailed weekly forecasts on WTI crude oil and Brent with an image of Chicken Little running around warning all of his pals that the sky is falling. This is a feeling that resonated with many market participants around the world as stock indices and commodities have plunged lower.

The reality is WTI and Brent will find a bottom soon, and there are logical/technical points at which these bottoms could form. From a technical standpoint, WTI crude oil is already well oversold and due for a correction. There are daily and weekly divergence setups on many momentum indicators, including our own KaseCD and KasePO, but this has been the case for weeks. Therefore, until a significant retracement takes place, reversal patterns form, and the daily and weekly momentum divergences are confirmed, the outlook will remain negative.

WTI met major support at $37.9 when it fell to $37.75 early Monday and settled at $38.24. Given today’s price action though, it looks as though the decline is going to continue to extend. WTI pulled back to $39.5 where an intraday double top formed, and the pattern was confirmed when prices fell below $38.3. The projection for the double top is $37.1. Look for at least $37.52, the 1.618 projection of the wave down from $39.5, and then $37.1 tomorrow.

The small pullback from $37.83 may extend to $38.45 and even $38.88 first. The 38 percent retracement of the decline from $39.46 to $37.83 is $38.45 and the 62 percent retracement is $38.88. The latter is also the 0.618 projection of the wave up from $37.75 and is expected to hold. A close over this would call 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

Who could ever forget the iconic 1984 Wendy’s commercials featuring three little old ladies yelling “where’s the beef?”(If you are too young to remember treat yourself to taking a minute to watch.)

The commercials and the phrase “where’s the beef?” spawned a cultural catchphrase that has since become a statement questioning the value and substance of a product. The value of beef, priced in live cattle futures, has tripled since 1984, but a downturn in prices over the past 10 months begs the question, “where’s the beef going?”

On October 31, 2014 the perpetual (first nearby) live cattle futures contract rose to an all-time high of 171.975 cents per pound. Since then, prices have fallen in a corrective manner and recently came very close to meeting major support at 141.35. This is a highly confluent target that serves as a series of Fibonacci projections for the waves down from 171.975 (blue), 164.25 (green), and 156.475 (red) as shown in the chart below.

A close below 141.35 would open the way for the decline to continue to at least 135.6 and very likely 131.4. The latter is another highly confluent wave projection and potential stalling point, but the key target for live cattle futures is 127.0. This is the 1.618 projection of the largest and most important wave down from 171.975 (blue) and the more recent wave from 156.475 (red).

The decline from 171.975 is no doubt a correction of the long-term move up, and corrections normally hold the 1.618 target. Therefore, we expect to see a significant pullback and potential bottom form at 127.0. However, a sustained close below this would open the way for an extended decline to 122.05 and possibly 112.0.

The decline has stalled at 142.25 for now, and so far the subsequent rise to 150.85 is most likely a small correction of the move down (yes we are talking about corrections of corrections). The recent move up is most likely being driven by a typical seasonal boost for beef ahead of Labor Day.

The upward correction may extend, but 153.4, the 1.00 projection of the wave up from 142.25 (pink) and the 38 percent retracement of the decline from 171.975 should hold. The connection to 153.4 is made through the 0.618 projection of 149.8.

Based upon most technical factors as of this analysis, we don’t expect to see prices rise much higher than 153.4. This is a very important level not only because it is a confluent retracement and wave projection, but it also protects the 156.475 swing high. A move above 156.475 would take out of the waves down from this swing high and from 164.25. As a result the likelihood of a decline to or below 141.35 would be significantly dampened.

Therefore, upon a close over 153.4 odds would shift in favor of an extended upward correction to 156.8 and likely 159.5, a crucial target because it is split between the 1.618 projection of the wave up from 142.25 and the 62 percent retracement of the decline from 171.975. A sustained close over 159.5 would indicate the decline from 171.975 is over and would call for 168.5 and higher.

So to answer the question “where’s the beef going?”; technical factors show that prices will most likely fall once the Labor Day demand boost passes. Look for resistance at 153.4 to hold and for 141.35 to be challenged again. A close below 141.35 will call for 135.6, 131.4, and 127.0.

Check out Kase on Technical Analysis to learn more about trading and forecasting price using technical analysis.

Natural Gas Forecast: Prices Finally Break $2.64

Tag: Technical Analysis

Analysis

Outlook