Gasoline Futures Oscillating in Range

By Dean Rogers

Last week several top refiners reported a jump in their third quarter earnings compared to a year ago. Attractive crack spreads and refining margins due to lower oil prices and healthy demand for gasoline have helped refiners pump in profits. In addition, last week’s rise in oil prices, which was partially attributed to a quick turnaround in the refinery maintenance season, has helped to stabilize gasoline futures and open the way for a test of key resistance near $1.43.

December gasoline futures have oscillated in a trading range bound between approximately $1.26 and $1.43 since early September. The most recent move up from $1.26 overcame resistance at $1.36 and is now poised to test the upper boundary of the range at $1.43. This is the 2.764 projection for the small wave $1.2621 – 1.323 – 1.2627, the 0.618 projection for the wave $1.1756 – 1.4604 – 1.2621, and the 38 percent retracement of the decline from $1.8392 to $1.1756. There is a good chance that $1.43 will hold, but a close over this would open the way for at least $1.55.

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The Kase Easy Entry System (KEES), which is based upon a sophisticated algorithm that accounts for multiple momentum indicators, bar lengths, swings, and bar structure, confirms the positive bias in the near term. The blue dot indicates that the underlying indicators and bar lengths are permissioned for long trades to be taken.

Prices are expected to reach at least $1.43 before another turn lower to test support takes place. For now, look for immediate support at $1.31 and for key support at $1.26. A close below the latter would call for the late August low of $1.1756 to be challenged.

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

December WTI’s wave $39.22 – 50.89 – 44.31, which met its 0.618 projection at $51.42, has been taken out by the $43.64 swing low. Consequently a technical failure of the move up has taken place and odds have shifted in favor of a continued decline. Look for $43.0 tomorrow and very likely $42.5 over the next few days. A close below $42.5 would confirm the negative outlook and technical failure. There is an outside chance that the support trend line will hold. Look for resistance at $45.4 and $46.5.

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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

This is the time of year when everyone is looking for a bottom and pre-winter rally for natural gas. The logic and seasonal timing make sense, but picking bottoms is a dangerous game. Those that successfully time the bottom are more lucky than good. The best that most mere mortals can hope for is to be prepared for the turn so that they can react in an effective manner that fits their goals, strategy, and risk appetite.

This is why it is important to have a forecast and directional opinion (and yes, sideways is a direction) about the market in addition to a set of reliable indicators like Kase StatWare or KaseX to time entries and exits. The forecast is the framework for the market that lets you know where key support and resistance are and when you can expect correction and potential trend reversal. Indicators tell you when to get in, where to place stops, and when to get out.

For instance, $2.40 was major support for November natural gas. This was a highly confluent target, and we had discussed this level as a potential stalling point for many weeks (even months) leading up to the decline to $2.403 on October 2. However, the subsequent move up was shallow, choppy, and corrective. Long trades could have been taken on shorter bar lengths during the corrective move up, but in our detailed weekly forecasts and mid-week blog updates we anticipated another decline and test of $2.40 because the market was struggling to overcome key resistance levels at $2.48 and $2.59.

November fell to $2.41 on October 16 and started to bounce again. The move stalled at $2.50 on Tuesday, October 20 and prices fell to new lows for November and the winter contracts on Wednesday, October 21.

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$2.40 has held so far on a closing basis, but a sustained close below this level will open the way for at least $2.33, the 1.00 projection for the wave $2.578 – 2.41 – 2.499 and very likely $2.27. The latter is a confluent objective for the waves down from $2.859, $2.72, and $2.578 making it the next potential point at which a bottom could be made.

Most technical factors are negative and there is little evidence that the decline is going to stall. However, the importance of support at $2.33 and especially $2.27 indicate that we should be prepared for at least another correction and a potential bottom soon. Keep a close eye on your indicators to tell you when to time your entries and watch for closes above key resistance levels to confirm the move down has ended.

For now, initial resistance is $2.45 and key resistance, for the near term, is $2.50.

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

Spot natural gas is still looking a bit unsure of the move up, but the forward months, especially the winter strip, are looking reasonably positive. This likely indicates that a longer-term move up is underway, but for now it is looking like the prompt month could settle into a choppy trading range while it awaits more data (weather) to push natural gas prices higher or lower.

November futures stalled at $2.559 before reaching crucial resistance at $2.57. Tuesday’s bearish engulfing line was followed by a positive move on Wednesday. Resistance at $2.57 should be tested. A close over $2.57 would call for $2.63 which then connects to $2.68. First support is $2.49, but the key level for the near-term is near $2.43. A close below this would confirm the move up has failed and would open way for a new low.

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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

Last week’s break higher out of the bullish pennant was positive and the move up extended to meet the 0.618 projection of the wave $38.51 – $50.04 – 43.71. However the move stalled there, formed a bearish evening star and blow-off high, and then proceeded to test $46.4, the 62 percent retracement of the move up from $43.71.

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The market is telling us that it needs more time to sort itself out as it awaits more data. We have stated that the move up would likely be a grind higher, and so far that has been the case.

For now, another trading range will likely form between $46.4 and $50.0. Look for resistance at $47.4 and $48.2.

Should prices fall below the $43.71 swing low the outlook will shift back to negative for the longer-term.

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

November natural gas had worked its way higher to challenge key resistance at $2.53 over the past few days after meeting major support at $2.403 last week. The move up has been shallow and choppy compared to the decline and could be interpreted as a bearish expanding wedge. The market also keeps giving back its intraday gains at the end of each day, which indicates hesitance to continue higher. This point is emphasized by the formation of an intraday double top at $2.53.

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The completion point for the double top is $2.45, which is also in line with the wedges lower trend line. A close below this would confirm the double top and a break lower out of the wedge, opening the way for another test of $2.40 and possibly lower.

That said, a few positive factors, including bullish daily divergences and a morning star still show that the upward correction could extend to $2.60. The key for a move of this magnitude is for $2.45 to hold and a close over $2.53. The latter is the morning star’s confirmation point, the 1.00 projection for the wave $2.403 – 2.491 – 2.436, and the 38 percent retracement from $2.72 to $2.403.

On balance, with all factors considered, it is looking more and more like natural gas will settled into a trading range between $2.40 and $2.53 for a few weeks while awaiting external factors (weather) to sort out the direction for the next few months.

This is a brief natural gas forecast. 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

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.

WTI and Brent patterns

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.

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

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.

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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 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.

wti crude oil

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.

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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.