Technical Analysis Archives - Page 48 of 58

By Dean Rogers

November natural gas closed below major support at $2.63 Tuesday and then settled below $2.55, the 0.618 projection of the wave $2.859 – 2.592 – 2.72 Wednesday. Most waves that meet the 0.618 projection extend to at least the 1.00, in this case $2.45. Therefore, odds favor $2.45. This is a highly confluent target that is in line with this year’s $2.443 perpetual swing low. Many factors make $2.45 a potential stalling point. At minimum, we expect a pullback once $2.45 is met.

First resistance for tomorrow is $2.55. Resistance at $2.59 should hold. The key level for the near term is $2.64. This is the 62 percent retracement of the decline from $2.742 and the 38 percent retracement from $2.859.

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 Dean Rogers

After the late August rally WTI settled into a narrowing range that forms a pennant. This is a continuation pattern that indicates odds favor a break higher. However, these odds are somewhat dampened due to the price rise that took place before their formation was small in comparison to the size of the formation. In addition, more than half of the price rise has already been eroded.

The small wave up from $43.71 indicates that a close over $46.0 would call for $47.0, which is in line with the top of the pennant.

We like support at $44.1 to hold, but $43.0, near the 62 percent retracement of the move up, is the key for a negative outlook.

On balance, even if prices break higher or lower out of the pennant, we could see crude oil continue to oscillate in a wider range for another few weeks while the market sorts out fundamental and geopolitical factors.

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, please sign up for a complimentary four week trial.

Read on TraderPlanet

by Cynthia A. Kase

Iced Coffee Anyone?

Just keeping up with the news, coffee should enter a lower priced environment, longer-term. In the short-run, technicals indicate an expectation of prices testing a threshold at 110 would not be unreasonable.

Coffee Production Forecast

Economists see much room for increased production out of Africa, which used to be the planet’s biggest crop exporter, producing 25 percent of the world’s coffee. After many years of state interference in, and regulation of agriculture, coffee production per acre is so low that it could fairly easily be increased by a factor of five. Simple changes have already increased output per tree by 50 percent in some areas. Incubator commodity firms are proving increases are practical. So, more supply means eventual lower prices.

Near-term Coffee Technical Indicators

We’ve been bearish technically on coffee since our previous article that focused on the September contract, June 23 Will the Sun Shine on KC. We expected coffee to break down out of its correction, first to 123.2 and then to at least 117.50. 141 was resistance. KCU15 dropped to 123.65, rose to 139, coming within 2 cents of our level, then hit 117.5 exactly before meandering down to 113.05.

Given coffee’s back in the news, let’s look at the December contract. The chart patterns are unrelievedly negative on the daily chart and above. The intraday chart been bouncing along a downwardly sloping trend line. The market is attempting to skid to a halt, or at least a stall. The pattern intersects the y-axis at about 114.6. This is highly confluent, major support, as 114.6 is the smallest (0.62) extension for the wave down from 207.8, as well as, both extension targets and corrective projections for more recent waves. It’s also the endpoint of a rare ending diagonal triangle.

Coffee Outlook

I think 114.6 will break, even if there’s a bounce. The 122 – 125 area must be solidly overcome for a recovery to begin. On a slip below 114.6, I’d look for 110.6. One reason 114.6 will probably break is that the first of the two equal waves shown in red targets 112.7 as its 1.62 extension, showing no support at 114.6.

There might be a test of and small bounce after 112.7, which is “sandwiched” between 114.6 and 110.6 within the wave structure. So the three prices are connected making it more probable for the lower number to be met on a break through 114.6. Given that KCZ15 is making new contract lows, there’s not many numeric methods, aside from the waves to confirm the values discussed, though the daily warning line on Kase’s stops is 114.6.

Unlike September, this contract has no support around 100.0. There’s big gap in the targets from 110.6 to 98.6. That means coffee wants to stay at least in the teens, and may move into a corrective phase into the 130s. So, I’d stay short, or day-trade short, but there might not be enough downside here for a longer lived position. Watch 110.6, and don’t crunch your ice.

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

by Dean Rogers

Read on TraderPlanet.com

You can feel it in the air, the mounting anticipation of an interest rate hike is coming to a head as investors, traders, and even my own feisty grandmother are jockeying for position ahead of this week’s Fed meeting.

Some pundits believe a rate hike at this time would be disastrous and that Tuesday’s S&P 500 gain of 1.3 percent was a sign the markets are telling the Fed to wait. Others believe the rate hike is long overdue and that the sooner the Fed raises rates the better.

There is a lot of indecision about what the Fed will do this week. However, one thing is for certain, whether Feds hike rates or not, the market’s direction for at least the next few weeks, and possibly months, will be determined within the next 48 hours.

What Do The Technical Factors Say?

The formation of a pennant reflects the market’s indecision. The pattern is bearish because it formed after the decline to 1867.01 on August 24. That said, there are enough bullish factors to indicate this formation has a higher than normal probability to fail.

Bearish Technical Factors

Pennant
Move up from 1867.01 stalled near the 50 percent retracement of the decline from 2103.47
Held Kase’s daily DevStop3 (large blue dot)
Decline to 1867.01 was non-divergent

The bottom of the pennant is near 1950 and a close below this would open the way for 1903. This then connects to confluent wave projections at 1838, 1732, 1665, and 1567. Upon a break lower out of the pennant we expect to see at least 1838 and very possibly 1732.

The lowest target at 1567 is interesting because it is near the 38 percent retracement from the March 2009 swing low of 666.79 to the recent 2134.72 swing high. In addition, 1567 is near the October 2007 high of 1576.09, just before the financial crisis, and the March 2000 high of 1552.87, just before the dotcom crash.

I am not calling for 1567 yet, but from a longer-term perspective, a decline to 1567 would be a normal technical correction (38 percent), and a 25 percent correction from high to low (less than half of the financial crisis’s decline).

Bullish Technical Factors

KCDpeak and PeakOut (oversold signals)
KEES buy signals (blue L’s) and long permissions (blue dots)

A close over 1985 would confirm the bearish pennant has failed and open the way for at least 2022, the 1.00 projection for the wave 1867.01 – 1993.48 – 1903.07. Then connects to confluent projections at 2070 and 2109 as the 1.382 and 1.618 projections, respectively. The latter is the last level protecting the 2134.72 high.

Conclusions

It is a very tough call and the market could break either way. On balance though, I see enough bearish evidence to state that I think the Fed will hike rates and the markets will break lower.

Now if you’ll excuse me, I need to call to my grandmother and tell her not to bet the farm on the downside. Maybe some puts are in order.

“Ask Kase” and your question may be chosen as the subject of a future column (askkase@kaseco.com).

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

By Dean Rogers

Natural gas had oscillated in an expanding triangle since August 24. Monday’s break higher out of the pattern was positive, but stalled at $2.794, the 50 percent retracement from $2.959 to $2.632.

The move to $2.794 was healthy because the decline had become stale. The rally gave bears a new opportunity to short the market.

Tuesday’s close below Monday’s $2.73 midpoint formed a daily dark cloud cover (bearish), and Wednesday’s close below $2.70 confirmed the pattern. This is also in line with the 62 percent retracement from $2.632 to $2.794.

Caution is warranted and trading will likely remain choppy, but the bearish technical factors indicate another test of $2.63 is expected. A close below this would open the way for the decline to $2.55 and lower have expected for several weeks.

By Dean Rogers

Last week we stated WTI and Brent would likely settled into trading ranges while sorting out longer-term fundamental factors and the late August price surge. That has been the case, and so far the oscillations have formed a flat descending triangle for WTI and a pennant for Brent.

Both patterns are bullish, but have a higher than normal probability to fail in our opinion. Even upon a break higher we do not expect a bullish rally to ensue, but rather a test of the recent swing highs.

Should the patterns fail look for major support at $42.6 for WTI and $46.7 for Brent. In other words, we think the trading range will continue to form between approximately $42.6 and $49.0 for WTI and $46.7 and $52.0 for Brent.

By Dean Rogers

It is a glorious time of year. The evenings are cooler, the air is a bit crisper, and the seven month void in my soul has been filled. Football season is upon us, and all is right with the world.

I grew up playing football and my father and uncles coached youth football for over 30 years. Being a coach’s son I have always had an appreciation for the tactical side of the game, especially low scoring (some might say boring) defensive struggles. These games are won not only by raw talent, but strategy, patience, and perseverance.

A defensive battle on the gridiron reminds me of the natural gas market right now. From the outside looking in most see a stale and boring game being played. It is a bit like watching grass grow and they have already switched channels to watch a more exciting game. However, there is a battle taking place between bulls and bears and natural gas’s game is nearing the end of the fourth quarter.

My money is still on the bears (hopefully Cutler has been benched).

Natural gas has oscillated in a range that is widening ever so slightly since August 24. The pattern it forms is called an expanding triangle, which is negative because the market entered the formation after falling from $2.959 to $2.641. Expanding triangles form when there is mounting indecision and typically has bearish ramifications.

The bulls may attempt one last Hail Mary before all is said and done. Another test of the upper end of the wedge near $2.75 might take place over the next few days, but odds continue to favor a decline to $2.54 and lower once prices break out of the triangle and close below $2.62.

The natural gas game may go into overtime, and it may be another week or more before prices finally break lower. For now though, stick to your strategy, be patient, and persevere.

By Cynthia A. Kase

Read on TraderPlanet

As a fledgling oil trader over 32 years ago, the one exchange with which I was familiar was NYMEX, now part of CME Group. So I’m always interested in how the exchange is doing. With erratic swings in equity, fixed income, and FOREX markets, some think investors will increasingly use the CME to manage risk and take advantage of bear markets.

CME Outlook

Let’s see what the charts have to say about this transaction volume, as opposed to price driven, market.

As August closed, CME had hit $95, retracing 62 percent of the decline from $100.87 to $84.33. Tuesday, CME made a $94.92 high, closing just 10 cents below that – the highest close since $84.33.

Will the current modest recovery hold below its 62 percent retracement, or continue higher? The call is not clear, but my bias is higher with the proviso that CME must close and remain over $95.2 soon.

CME Technical Analysis

Here are the technical reasons:

The trend terminus (Y³/X²) for the first wave down, 100.87 – 95.01 – 98.661, calculated to $84.30. $84.33 was hit, fulfilling the target almost exactly.
The market gapped down on the August 24 open, before meeting $84.33. This could be an exhaustion gap.
The daily candlestick for August 24 was a bullish “hammer”.
Together with the prior day, August 21, the hammer comprised a “morning star” setup, completed by a close over the August 21 midpoint.
The low on August 24 generated an oversold signal.
Every downside test generated by small down gaps has failed.
Tuesday importantly closed over the midpoint of the very bearish week ending August 21.

The reason $95.2 is critical, in addition to being just over the 62 percent retracement, and the midpoint for the bearish week, is that it is structural resistance and previously support as shown on the chart. $95 is also the critical daily Kase DevStop3. So, a close over will mean, per statistical testing, odds for a close over $100 are 70 percent.

The next threshold is $97.5, confluent for the wave 84.33 – 95.00 – 90.68, as the 0.62 extension and Phi corrective projection. It is a key target for the smaller waves following, and the open of the big down week noted above. Once $97.5 is hit, a trading range could ensue, but it would not be surprising to see $100.87 tested, and even new post-recession highs made. If I were short, I’d certainly scale out on closes in the $95.2 to $97.5 range.

Recommended CME Trading

The big bearish factor is that $95 has not yet been overcome. If I were long, I’d begin to lighten up at $90, and become more aggressive below $86 and out by. Playing from the short side, I’d be emboldened below $90, and looking for confirmation at $86.5 and $82.6. The “settlement” on CME isn’t in yet, but odds are leaning towards some moderation to the upside. For the CME no “exchange” just yet.

By Dean Rogers

WTI crude oil is settling into a trading, the boundaries of which will be determined over the next week or so. It is still too early to state the exact boundaries. Technical factors tell us the range will likely be set between resistance at $50.5 and support at $42.5. This is a wide, but typical, range for crude oil.

For the next day or so look for prices to rise to at least $46.4 and possibly $47.2. Both are confluent wave projections and retracements. $46.4 is also in line with Monday’s $46.41 swing high.

KaseX confirms Tuesday’s move up with a filtered long signal (green diamond) on the $0.50 Kase Bar chart shown below.

First support is $44.9 then $44.5 and $43.6. A close below $44.5 would shift odds in favor of at least $43.6 and very likely $42.5.

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.

Natural Gas Forecast: Poised to Test $2.45

Tag: Technical Analysis

Coffee Production Forecast

Near-term Coffee Technical Indicators

Coffee Outlook

What Do The Technical Factors Say?

Bearish Technical Factors

Bullish Technical Factors

Conclusions

CME Outlook

CME Technical Analysis

Recommended CME Trading