Technical Analysis Archives - Page 50 of 60

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.

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

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.

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.

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.

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?

Natural Gas Forecast: Expanding Triangle Bearish

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