Natural Gas Outlook Negative Before EIA Data Released

Tag: wave projecitons

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.

nat gas

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.


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.

NGG

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.

RBOB Gasoline continued its decline and met a crucial target at 155.8 for the primary wave down from 315.2. The trend terminus (T = 156.3), is the lowest that most trends extend. However, there is no evidence that the decline is going to end. The next targets are 147.3 and 139.2. The KaseCD is setup for divergence and the KasePO is oversold, so a correction may take place soon. Last week’s midpoint and open are initial resistance at 168.1 and 176.5. A close over 176.5 would call for $198.3.

rbob




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.

For detailed weekly forecasts take a trial of our energy commentaries.

brent




Kase’s senior analyst Dean Rogers reviews trade setups and price forecasts for e-mini S&P 500, crude oil, natural gas, AAPL, and VIPS using Kase Outlook, Kase StatWare, and KaseX.

http://youtu.be/pLCujMm5-WE

The WTI-Brent spread narrowed last week, but the move looks corrective. The spread will likely oscillate for the near-term, but ultimately odds favor a widening spread. The first target is (5.00), and a close below this would call for (6.50) and (9.00). Key long-term support is (11.80). This is a confluent wave projection and the 62 percent retracement from (19.38) to (0.01). Resistance at (0.90) should hold. A sustained close over (0.90) would open the way for 1.30 and 2.90.

For more information and to take a trial of Kase’s weekly energy forecasts please visit the Energy Price Forecasts page.

WTI-Brent




This is the fourth of a four part series on Kase Wave Analysis. In this video Kase’s senior analyst, Dean Rogers, shows how the Kase Wave Analysis can be combined with other technical factors and indicators to make trading decisions.

http://youtu.be/3JcHjdr2QWM