Price Forecasting Archives - Page 32 of 36

Markets are rarely more balanced that what we have experienced for natural gas over the past few weeks. After August failed to overcome $2.95 it stalled at $2.73, and is now in a mini-range between $2.73 and $2.87. Considering this week marked the end of the month and quarter, and is shortened due to the 4th of July holiday, a breakout will likely be delayed until next week.

The market is waiting for factors like summer weather and/or supply/demand issues to give us a breaking. The longer it delays the move up though, the more prices will erode away until it is too late to make a meaningful push higher.

It is still a bit early for the market to give up on a summer rally, but based on many technical factors we favor a break lower out of the mini-range between $2.73 and $2.87. This morning’s failed attempt to overcome $2.87, bearish KaseCD divergence and first short signal confirm our call. This would open the way for a confluent $2.64 target.

Should prices close over $2.87 look for another test of $2.95, which is the key threshold for a push to levels above $3.00 and a summer rally.

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.

by Cynthia Kase

Those of us who can remember KC and the Sunshine Band’s emergence in 1975 are now in need of a different kind of KC – coffee futures – to stay bright. Baby Boomers may be counted on to steadily drink the stuff, but it might be another kind of baby who might ultimately determine how much we’ll have to pay for it – El Niño.

The price of coffee futures for September delivery having made a high of 232 (cents) last fall, purportedly because of drought conditions, fell by almost half to make a 126.3 low in late May. Despite a bit of a bounce prices dropped to 127.9 last Friday. Having held May’s low is it now time to buy?

The National Oceanic and Atmospheric Administration apparently has identified El Niño conditions and is saying there’s a 90 percent chance the baby will stick around all summer, and maybe even into 2016. The possible effects on coffee are unclear as production in some regions could get a boost from wet weather offset by drought conditions elsewhere. Let’s see what the technicals say.

On the positive side, the monthly chart has a bullish Harami line and star. Also the wave patterns form a symmetrical, nested ABC pattern as marked on the chart.

In an attempt to break above earlier support at 135 (see green line), Tuesday’s 134.85 failed and gave back 6 cents thereafter. Prices, more or less have traded sideways for the past few days as circled. On June 10, an attempt to break 141, the bottom an old corrective pattern, also failed.

Dead sideways markets are difficult to call, but my bet is that 126.30 will be broken, and that there’s potential for 100.

The overall structure is down. Sustained closes above 141 will be needed to begin a reversal. This is not only the previous swing high, but also the 1.62 extension for the small wave up from 127.9, and Kase daily DevStop 3 and weekly warning line. Next is a highly confluent 150, the trend terminus, Y3/X2 value, 2*1.38 extension for the small wave, and 1.38 extension and f corrective projection for the wave up from 126.3.

On the downside, first support which must be definitively broken for a renewed bearish tone to take hold is 123.2, though the old 122.95 might become secondary support. Below this area, targets are 117.5, 109.5, and 100 – all confluent wave projections. Focusing on 100, that’s the 2*1.38 extension for the first wave down from 232 to 191.75, and the 1.38 extension for the next from 232 to 167.85, as well as a critical threshold as the weekly DevStop 3 value.

So unless and until coffee futures overcome resistance, watch each support level to see which might produce a reversal. Meantime, maybe relaxing to an old LP as you sip a cuppa joe is in order.

“Ask Kase” any question you may have about any actively traded security, and your question may be chosen as the subject of a future column (askkase@kaseco.com).

Remember to send your questions for next week to askkase@kaseco.com, visit www.kaseco.com, or check out Kase’s latest on www.wiley.com.

RBOB gasoline prices are weak after stalling at 218.58. This was an important confluence point because it was the 50 percent retracement of the decline from 315.2 and the 0.618 target for the wave up from 122.65. The move up was exhausted once it reached 218.58 and negative factors like a bearish KasePO divergence have shifted near-term odds in favor of a pullback to 199.7 and 188.1 over the next few weeks.

That said, the pullback is most likely corrective.

Our studies show that nearly 80 percent of waves that meet the 0.618 target extend to at least the 1.00 target, which is 244.39 for the wave up from 122.65. This is also near the 62 percent retracement from 315.2. The only way to negate a wave’s projections is to take out the swing low of its correction, in this case, 169.25. Therefore, while 169.25 holds the longer-term outlook for gasoline is positive and favors an extension to 244.39.

Taking out the 244.39 swing low would be extremely bearish for gasoline prices. Right now we don’t that will be the case, but closing below 188.1 support will go a long way to increasing the odds of ultimately taking out 169.25.

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.

Last week we discussed the chart below and the importance of $2.92 as the 0.618 projection of the wave up from $2.54 (not shown) and the 62 percent retracement from $3.15. The chart is being shown again, with a few updates, because not much has changed over the past week.

The crucial $2.92 level has been tested four times now, including this morning’s brief excursion to $2.955. Because prices failed to close over $2.92 again, we expect to see another oscillation lower to challenge support at $2.80. This is the 38 percent retracement of the move up and is near Monday’s $2.83 midpoint and Tuesday’s $2.831 low.

The bearish KaseCD and KasePO divergence and the DevStop2 hit on the $0.035 Kase Bar chart support the move lower and test of $2.80 tomorrow.

Tomorrow’s EIA may be the catalyst the market needs to either close over $2.92 or below $2.80. A close over $2.92 has strong bullish implications as discussed in our weekly natural gas forecast. A close back below $2.80 would call for another test of support and possibly the contract lows. For now, $2.92 and $2.80 are the levels to watch for clarification of the near-term, and possibly the longer-term, direction.

This is a brief analysis 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.

by Cynthia Kase

Read on TraderPlanet.com

“Ask Kase” any question you may have about any actively traded security, and your question may be chosen as the subject of a future column (askkase@kaseco.com).

To an earlier generation the “Dorsey” brought to mind the famed orchestra leader and his acclaimed song, I’ll Never Smile Again. Followers of the tech market, though, will immediately think of Twitter’s interim CEO, Jack Dorsey. He’s just replaced Dick Costello, who, having been pressured by disgruntled investors, recently resigned.

Pundits point to reasons why Twitter’s been doing so poorly. Some blame mismanagement and complacency. Other tech-world doyens, compare Twitter’s user base, only about 20 percent of Facebook’s, and think there’s lots of untapped potential.

So the big question is – will Twitter ever “smile again”? Should one sell, buy, wait, or what?

Long positions became tenuous as sideways action in April followed a failure to overcome last October’s $55.99 high. When markets are dead-sideways, directional traders hold risk unrewarded. Any long positions should have been exited, if not on inactivity, then on stops, as, on the monthly chart, April completed an evening star pattern, with May confirming its demise.

Bearish action accelerated with a down gap on Monday’s open and broke through a potential triple bottom around $35.6. Yet, the gap might be an exhaustion gap, and Tuesday traded about $1.70 up from its $33.51 low. Momentum indicators are set up for bullish divergence, which requires the low to hold and at least one up day to complete.

Tuesday’s low was the 0.62 projection of the key wave, $44.20 – 36.52 – 38.20, and is nearing a 38 percent decline from $53.49, and thus could form support. These are only glimmers of hope, but there’s no smiles as of yet.

Twitter Daily Candlestick Chart

If you’re looking for a buy, I’d wait and watch for $36, $38.25, and $39 and get in on closes over, depending on how aggressive you are, or use all three, scaling in. These levels are just above Kase’s daily DevStops 2 and 6, and weekly warning line, respectively, with two latter May’s midpoint and open. Tuesday’s up wave, 33.51 – 35.20 – 34.61, targets $36 as the 1.0 Fibonacci extension and f³corrective projection, and $39 as the trend terminus (35.20³/33.51²) and (2*1.38) extension. All three thresholds are important retracements, with $38.2 the critical 21 percent retracement of the entire move down from $55.99.

Retracement Table Down to $33.51

For the unsmiling, provided $35.6 holds on a closing basis, I’d sell into an intraday decline and hold tight stops until safely below $33.2, at which time scaling up to a higher intraday or daily chart would be okay. I’d continue to monitor risk very closely as there’s support at $32. Below that I’d hang short, watching action closely at confluent Fibonacci extensions of $30.8, $27.7 and $25.5, with the major downside target $23.8.

The crude oil market as a whole has continued to be dominated by stale and conflicting fundamental, technical, and geopolitical factors. These factors have brought about as much balance to the crude oil markets as Anakin Skywalker brought to the force. The most interesting factor is that many market participants seem to forget that markets have three direction: up, down, and sideways. Right now, WTI is stuck in a mind numbing sideways range. I say this because it is almost as exciting as watching the grass in my backyard grow.

During times like this we tend to grow impatient and frustrated. The easiest way to deal with a range bound market is to walk away, take a few deep breaths, work on our short game, and come back to play another day. However, we don’t all have that luxury, and have no choice but to participate and be driven insane by the constant change of direction and endless supply of chalky antacids we are popping like candy.

Luckily, technical analysis can help us to clarify the crucial breakout points for this range. Our models, which are based upon a combination of many different technical factors, show crucial resistance at $62.0 and support at $57.5. In addition, the line on close chart shown below confirms that these are the clear boundaries of the trading range. A break out of this range will help determine the direction for the next few months.

The challenge is that it is nearly a toss-up as to which direction the market will break.

Our weekly Crude Oil Commentary goes into great detail about the implications of a break higher or lower out of this range. We break down the wave formations, retracements, candlesticks, momentum, and other factors. The bottom line is that the range may be corrective, which means prices should break higher. However, our models show that that $57.5 will be tested at least once more before WTI closes over $62.0.

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 WTI and Brent crude oil price forecast. If you are interested, please sign up for a complimentary four week trial.

This is an important time for natural gas because the market is moving out of the spring shoulder months and into summer. The market had been poised to test the contract lows, which it did, but the lows held and prices reversed higher this week.

The July natural gas futures contract closed above $2.78 resistance on Tuesday and was driven by warmer temperatures in much of the eastern half of the U.S. To sustain the move warm weather will need to persist and key resistance at $2.92 must be overcome on a sustained closing basis. The market tested $2.92 in early trading Wednesday, but this level has held on a closing basis so far.

The $2.92 target is the gateway for a sustained summer rally because it is currently the most confluent target on the chart and makes connections to targets near, and well above, July’s $3.15 swing high. It the 62 percent retracement from $3.15 and the 0.168 projection for the move up from $2.54. A close over $2.92 will call for July’s $3.15 swing high to be challenged because the 1.00 projection for the wave up from $2.54 is $3.166.

The $2.92 level will probably be overcome in early trading tomorrow on an intraday basis, but again, the key will be a sustained close over $2.92. In fact, if there is another bearish EIA storage report tomorrow, the move up could stall.

First support is near yesterday’s $2.77 candlestick midpoint and the 38 percent retracement of the move up from $2.556. If the outlook is going to remain positive for at least the next few weeks then $2.77 should hold. Key support is $2.70, the 62 percent retracement. A close below this would put the market back into a cycle of testing the contract lows again.

The price of natural gas, or any commodity for that matter, is theoretically the fair price at a given time. Traders will buy gas when they think prices are going to rise, and sell it when they think it will fall. This may be oversimplifying the process a bit (okay, a lot), but the point is that rising and falling prices are reflected on charts.

Charts tell us what traders and other market participants think about the market and the actions that they are taking (buying or selling). Interpreting price action on charts is the forte of technical analysis. Therefore, technical analysis is good at telling us what the market knows about itself, especially for the near-term.

For the long-term, technical analysis can be used as a guide, but people change their minds, and therefore, so does the market. When these changes of heart and mind take place, so does the direction of the market and the reflection of price action on the charts. As a result these changes are reflected in the underlying technical factors too.

Here is what we are currently seeing on the daily chart and the $0.035 Kase Bar chart:

Tuesday’s close above Friday’s midpoint was positive but the $2.716 open held.
The move up was corrective and about the same size ($0.125) as prior corrections from $2.902 ($0.136) and $2.788 ($0.099).
The KaseCD and KasePO momentum indicators are declining.
The underlying KEES permissions (color-coded dots) are transitioning back to being short.

Therefore, for the near-term, the natural gas charts are tell us that prices will continue to decline to at least $2.54. This is a confluent support target and is the July contract’s low. It is too soon to say that prices will stall here. In fact, other than a correction once $2.54 is met, most technical factors call for prices to continue to decline to major targets we discuss at great length in our weekly Natural Gas Commentary.

Resistance at $2.79 is the 38 percent retracement of the decline and expected to hold. This threshold will be lowered to $2.76 once $2.54 is met.

WTI crude oil prices have been oscillating in a downward sloping channel for the past few weeks and the decline has formed a bullish continuation pattern. Although the formation is not a perfect flag, pennant, wedge, or triangle, it does appear to be corrective. More often than not corrective patterns like this ultimately break higher and the original up trend extends.

Crucial support at $57.0 held on a closing basis last week and Friday’s move up and the attempt to close over the upper trend line of the formation on Monday indicates prices should rise to at least $61.6 over the next few days.

Monday’s hanging man is negative, but so far Friday’s $59.13 midpoint has held. This is also the 38 percent retracement of the move up. A close below this would complete the hanging man and call for another oscillation lower to test support and possibly the lower trend line of the corrective formation.

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 WTI and Bret crude oil price forecast. If you are interested, please sign up for a complimentary four week trial.

Natural gas’ pullback still appears to be corrective, but has positioned itself to test a crucial decision point at $2.71. This is in-line with the $2.711 swing low, the 1.618 projection of the wave down from $3.105, and the 61.8 percent retracement of the move up from $2.443.

The $2.71 objective should be challenged ahead of tomorrow’s EIA report, which is confirmed by KaseX’s short signals on the $0.035 KaseBar chart today. The confluence, positioning, and importance of $2.71 leads us to believe that it will hold, at least initially, and will be followed by a trading range similar to the one seen throughout March.

This is a brief analysis ahead of tomorrow’s EIA report. Our weekly Natural Gas Commentary is a much more detailed and thorough natural gas forecast. If you are interested, please sign up for a complimentary four week trial.

Midweek Natural Gas Forecast – July 1, 2015

Tag: Price Forecasting