Natural Gas Forecast: Technicals Call for Decline to Continue

By Dean Rogers

For most of 2015 natural gas has traded within a range between $2.65 and $2.95, and within the past week prices have tested both the upper and lower boundaries of the range. After failing to overcome $2.95 and stalling at $2.934 on August 12, prices declined to $2.68 on August 18, a confluent target for the waves down from $2.957 and $2.934.

Technical and fundamental factors favor a continued decline below the $2.65 boundary of the range to at least $2.60. This is another confluent target and a close below $2.60 would confirm the break lower out of the trading range.

natural gas

Wednesday’s bullish Harami land and star setup indicates that the upward correction from $2.68 might extend to $2.776 and possibly $2.834 first. These are the 38 and 62 percent retracement of the move down from $2.934. Resistance at $2.776 should hold, but $2.834 is the threshold for another attempt to overcome $2.95.

Overall, the bias is negative. The move down may be a grind lower for now, but time is running short for summer weather to continue to support prices above $2.65. Last week’s push to $2.934 may have been the last hurrah, and the move down is now poised to continue.

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.

disney
By Cynthia Kase

Read on TraderPlanet.com

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

The media sector has been hit by fears about streaming video and unbundling. Disney reported decent revenues, but is trading at a relatively high multiple. With high hopes that Star Wars will boost Disney’s stock price, is the decline now a time to buy in?

Disney climbed from a $15.14 low back in 2009 to a $122.08 high on August 4, only to suffer an $11 plus down gap on the following day’s open. This precipitous drop, continuing to $104.24, disconnected the following price action from the previous uptrend. Though the dropped seemed large, it only retraced 38 percent of the rise from $78.54.

Aside from waves, the only key pattern is an intraday coil, shown in the chart below (dark red). Though coils are signs of uncertainty, this one appears to be a failed attempt to recover. The last wave up in green would be expected to exceed the earlier one, which did not happen

$0.75 Kase Bar with Coil

DIS Kase Bar Chart

Charts created using TradeStation. ©TradeStation Technologies, Inc. 2001-2015. All rights reserved. No investment or trading advice, recommendation or opinions are being given or intended.

If there’s a break higher, though, I’d buy above $111 and increase my position above $117.9. Otherwise, I’d watch $100. If it doesn’t break, then I would time in on signals as prices rise from a short-lived downside test. I would buy on a bounce up from $93.4. But if this lower “drop dead” support breaks, I’d watch Fantasia instead of DIS for now.

Here are the details. As the coil’s apex is approached, a breakout is expected, with upside and downside targets $117.9 and $97.8 respectively.

The decline stalled before hitting its 21 percent retracement, $100. This is a hugely important price because it is the first retracement of the entire move up.

Retracements to $122.08

DIS Retracements

$100 is also a key extension for the waves marked in magenta in the chart. The wave from $122.08 extends to $100 as its 0.62 projection, and the Phi corrective projection. The 1.62 extension for this wave is $93.4.

The magenta wave down from $111 extends to $100 as its 1.38 projection. The last small wave from $109.28 targets $100 as its 2*1.38 extension. (For more on wave targets, check out Kase on Technical Analysis).

The waves shown in blue calculate to immediate support at $101.5. This is also Kase DevStop3 on the weekly chart. If this level isn’t broken on a move lower, then the tone will improve. It’s likely though, if this is tested, $100 will be met. $100 is also a psychological barrier.

Below $100, there’s a wave projection to $97.6, the coil’s lower target, but a break of $100 will likely lead to the $93.4 confluence point.

On the upside, the recent $111 swing poses initial resistance both structurally and as a wave target. Above this there’s a confluence point at $114.9, but the big number is $117.9, coincident with the coil’s upper target. Above this, a resumption of the uptrend would be expected, with reasonably confluent targets up to about $133.

Send questions for next week to askkase@kaseco.com, and learn more about Kase’s services please visit here.

By Dean Rogers

The world’s supply of crude oil continues to outpace demand, and consequently the global supply glut is being forecast through 2016. WTI fell to its lowest level in over six years last week and Brent is inching its way closer to testing the $45.19 low made on January 13, 2015. A move below this would be the lowest price at which Brent has traded at in over six years.

Structurally, the market is overdue for a correction and Brent’s daily morning star setup, a bullish candlestick pattern, warns that such a correction might take place soon. The decline’s momentum is also weakening, and there are daily and weekly divergence setups for Brent.

Brent and products attempted to stabilize and even rise in a corrective manner last week, but the move stalled. On Friday Brent crude broke lower out of the intraday coil shown below on the $0.50 Kase Bar chart.

brent crude

The break lower out of the coil indicates the decline should continue. The waves projections down from $55.0 (green), $51.69 (light blue), and $50.83 (blue) call for at least $47.9. This is a confluent wave projection that connects to $46.9 and finally $45.5.

The move down is becoming a grind, but until Brent crude can close over at least $49.9, look for the move down to extend. A close over $49.9 would at least create the potential 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

Patience is a virtue.

Natural gas has been trying the patience of traders as it continues to trade in a range between approximately $2.65 and $2.95. This week’s rise from $2.706 is very similar to last week’s move up from $2.735, and given today’s decline and close below $2.80, it looks like another failure to overcome key resistance at $2.89 is taking place…again!

September futures stalled at $2.863, the 62 percent retracement from $2.957 to $2.706. This is also just below $2.892, the 0.618 projection of the wave up from $2.656. The retracements and projections confirm that $2.89 is a key level. A close over this would call for an attempt to overcome $2.95 and break out of the trading range.

natural gas

However, the bearish KaseCD divergence and close below $2.80, the 38 percent retracement from $2.706 to $2.863, indicates prices are now positioned to challenge support at $2.77, the 62 percent retracement. A close below $2.77 would then open the way for another attempt of $2.65 and lower.

The take away this week – be patient.

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

RBOB Gasoline futures tested support at 167.43 on Monday and have taken out the crucial 169.25 swing low. The outlook is negative, but many technical factors, including Monday’s dip below the lower Bollinger Band, indicate a correction should take place once 160.0 is met. This is the confluence point between the 62 percent retracement of the move up from 122.65 and the 1.618 projection for the primary wave down from 218.58.

gasoline

Look for resistance at 172.3 and 181.3. The latter is expected to hold.

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.

Natural gas is idling in neutral again and is struggling to overcome key resistance levels. We are still negative for the longer-term, but the near term outlook is looking slightly positive.

The small move up is confirmed by long KaseX signals (green diamonds) on the $0.035 Kase Bar chart. In addition, Wednesday’s close over $2.895, the 1.00 projection for the wave up from $2.785, has opened the way for its 1.618 projection near $2.96. The $2.96 target is crucial because it is the 0.618 projection for the wave up from $2.644. A close over $2.96 would call for an extended correction to targets above $3.00.

natraul gas

Other than the quick move up from $2.644, the recent move up has lacked conviction. A daily evening star setup and hanging man indicates traders are still not quite sure if the market is ready to make the push higher. Tuesday’s $2.84 open is first support, and a close below this would call for another test of the $2.785 swing low.

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.

August natural gas is attempting to rally above $3.00 after stalling at $2.644 last Thursday. The surge over the last week may be a desperate attempt to push prices to targets above $3.00 before summer’s end, and is being driven by speculation of above normal temperatures through the end of this month and into August.

The near-term outlook took a positive turn Wednesday when prices closed above $2.884, the 0.618 projection of the wave $2.588 – 2.977- 2.644. This clears the way for a rally to the 1.00 projection of $3.03. This is a potential stalling point for the upward correction. A close over $3.03 would call for the $3.20 confluence point with intermediate resistance at $3.11.

natural gas

Caution is warranted though because it is a bit early to get overly exuberant about a bullish recovery. The balance of bullish and bearish factors is razor thin and shifts day-to-day. The move up is almost certainly corrective of the longer-term decline. Do not be surprised to see prices pull back and settle below $2.82 on Thursday should there be a disappointing EIA storage report. This, in turn, would call for $2.75 and lower.

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.

As predicted WTI crude oil has broken lower out of the recent trading range and fell by nearly eight percent on Monday. The important 1.382 projection was met at the $52.41 swing low. Key support at $50.5 should be tested tomorrow. We consider this a decision point for a much more bearish outlook and decline into the mid-$40’s. Today’s action may even dust up talks about the $30s again, though we think that conversation is a bit premature. Look for resistance at Monday’s $54.4 midpoint. This may be tested in early trading Tuesday, but should hold.

wti crude oil

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.

The RBOB gasoline crack spread widened to $25.64 on Monday and could test $27.77 before narrowing again. Resistance near this level is expected to hold and the crack is poised to narrow now that the 0.618 projection of the wave down from $33.80 was met. We would look to short the crack spread soon because KaseX generated a filtered sell signal on June 25th. The key target at $19.00 is the 1.00 projection and the top of the gap that took place on February 23rd.

crack spread

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.

Day-to-day speculation regarding summer weather forecasts continue to dominate short-term natural gas prices. The lack of clarity has caused natural gas to settle into a range between $2.55 and $2.95 after failing to close over the upper end of the range last week.

Technical factors show that prices are due for a test of the lower end of the range where contract lows will be challenged. Because the wave down from $2.955 (shown in red) met its 0.618 projection we expect to see at least its 1.00 projection of $2.62. This is also the 0.618 for the wave down from $3.105 (shown in blue).

natural gas prices

That said, it is still early for support to give way to the longer-term bearish trend, so the decline will likely be a grind. Support at $2.71 is holding strong, but a disappointing EIA storage report tomorrow would clear the way for $2.62. This is a confluence point just like $2.71, so $2.62 should hold.

Key resistance is $2.83 because it is in line with the $2.837 swing high. Overcoming $2.837 will take out the wave down from $2.955 and negate the near-term potential for $2.62.

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, please sign up for a complimentary four week trial.