Author: Dean Rogers, CMT

Dean Rogers, CMT is the general manager of the Kase Call Center in Albuquerque, New Mexico. He oversees all of Kase and Company, Inc.’s operations including research and development, marketing, and client support. Dean began his career with Kase in early 2001 as a programmer but has developed into Kase’s senior technical analyst. He writes Kase’s award-winning weekly Crude Oil, Natural Gas, and Metals Commentaries. He is an instructor at Kase's classes and webinars and provides all of the necessary training and support for Kase's hedging models and trading indicators for both retail and institutional traders.

By Dean Rogers

For the past few weeks each bit of positive crude oil news or fundamental data has seemingly been offset by something negative. As a result, November Brent has settled into a rectangle formation with boundaries between $47.0 and $50.3.

The upper boundary of the rectangle is poised to be challenged after Monday’s move up to $49.87. The pullback at the end of the day indicates another oscillation lower might take place first, but for now, odds still favor a break higher. A close over $50.3 would call for at least $51.7.

Conversely, Brent’s move up has already failed once after breaking higher out of a bullish pennant on September 15. Since then the rectangle has formed. Should the rectangle fail, and prices close below $47.0, look for at least $45.3.

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 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.

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 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.

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.

Crude Oil Forecast: Brent Oscillating in Bullish Rectangle