Technical Analysis Archives - Page 52 of 60

By Dean Rogers

On Friday evening I sat down to write Kase’s detailed weekly forecasts on WTI crude oil and Brent with an image of Chicken Little running around warning all of his pals that the sky is falling. This is a feeling that resonated with many market participants around the world as stock indices and commodities have plunged lower.

The reality is WTI and Brent will find a bottom soon, and there are logical/technical points at which these bottoms could form. From a technical standpoint, WTI crude oil is already well oversold and due for a correction. There are daily and weekly divergence setups on many momentum indicators, including our own KaseCD and KasePO, but this has been the case for weeks. Therefore, until a significant retracement takes place, reversal patterns form, and the daily and weekly momentum divergences are confirmed, the outlook will remain negative.

WTI met major support at $37.9 when it fell to $37.75 early Monday and settled at $38.24. Given today’s price action though, it looks as though the decline is going to continue to extend. WTI pulled back to $39.5 where an intraday double top formed, and the pattern was confirmed when prices fell below $38.3. The projection for the double top is $37.1. Look for at least $37.52, the 1.618 projection of the wave down from $39.5, and then $37.1 tomorrow.

The small pullback from $37.83 may extend to $38.45 and even $38.88 first. The 38 percent retracement of the decline from $39.46 to $37.83 is $38.45 and the 62 percent retracement is $38.88. The latter is also the 0.618 projection of the wave up from $37.75 and is expected to hold. A close over this would call 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

Who could ever forget the iconic 1984 Wendy’s commercials featuring three little old ladies yelling “where’s the beef?”(If you are too young to remember treat yourself to taking a minute to watch.)

The commercials and the phrase “where’s the beef?” spawned a cultural catchphrase that has since become a statement questioning the value and substance of a product. The value of beef, priced in live cattle futures, has tripled since 1984, but a downturn in prices over the past 10 months begs the question, “where’s the beef going?”

On October 31, 2014 the perpetual (first nearby) live cattle futures contract rose to an all-time high of 171.975 cents per pound. Since then, prices have fallen in a corrective manner and recently came very close to meeting major support at 141.35. This is a highly confluent target that serves as a series of Fibonacci projections for the waves down from 171.975 (blue), 164.25 (green), and 156.475 (red) as shown in the chart below.

A close below 141.35 would open the way for the decline to continue to at least 135.6 and very likely 131.4. The latter is another highly confluent wave projection and potential stalling point, but the key target for live cattle futures is 127.0. This is the 1.618 projection of the largest and most important wave down from 171.975 (blue) and the more recent wave from 156.475 (red).

The decline from 171.975 is no doubt a correction of the long-term move up, and corrections normally hold the 1.618 target. Therefore, we expect to see a significant pullback and potential bottom form at 127.0. However, a sustained close below this would open the way for an extended decline to 122.05 and possibly 112.0.

The decline has stalled at 142.25 for now, and so far the subsequent rise to 150.85 is most likely a small correction of the move down (yes we are talking about corrections of corrections). The recent move up is most likely being driven by a typical seasonal boost for beef ahead of Labor Day.

The upward correction may extend, but 153.4, the 1.00 projection of the wave up from 142.25 (pink) and the 38 percent retracement of the decline from 171.975 should hold. The connection to 153.4 is made through the 0.618 projection of 149.8.

Based upon most technical factors as of this analysis, we don’t expect to see prices rise much higher than 153.4. This is a very important level not only because it is a confluent retracement and wave projection, but it also protects the 156.475 swing high. A move above 156.475 would take out of the waves down from this swing high and from 164.25. As a result the likelihood of a decline to or below 141.35 would be significantly dampened.

Therefore, upon a close over 153.4 odds would shift in favor of an extended upward correction to 156.8 and likely 159.5, a crucial target because it is split between the 1.618 projection of the wave up from 142.25 and the 62 percent retracement of the decline from 171.975. A sustained close over 159.5 would indicate the decline from 171.975 is over and would call for 168.5 and higher.

So to answer the question “where’s the beef going?”; technical factors show that prices will most likely fall once the Labor Day demand boost passes. Look for resistance at 153.4 to hold and for 141.35 to be challenged again. A close below 141.35 will call for 135.6, 131.4, and 127.0.

Check out Kase on Technical Analysis to learn more about trading and forecasting price using technical analysis.

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.

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.

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

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

$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.

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.

By Dean Rogers

For several weeks natural gas has been trading within a range bound between $2.65 and $2.95, and more recently between $2.71 and $2.88. On Wednesday natural gas prices closed at the highest level since May 21 at $2.931, and the first class KEES permissions (blue dots) confirm the positive tone. Natural gas futures are now poised to overcome $2.95 and challenge $3.00. This is a confluent projection for the waves up from $2.656 and $2.706.

A close over $3.00 will open the way for an extended upward correction, but keep in mind, this rally may be short lived as the end of summer and its warm weather are rapidly approaching. This upward correction may very well be the last hurrah before the end of summer, and it is going to be a lot easier for longer-term bears to short from $3.00 versus $2.70.

In addition, not only is the market is nearing a past failure point at $2.95, but both the KaseCD and KasePO momentum indicators are setup for bearish divergence. This is a signal that forms when higher price highs are accompanied by lower momentum highs. Bearish divergence is a signal that indicates the move up is exhausted.

Should price turn lower look for support at $2.85 and $2.70. These are the 38 and 62 percent retracements of the move up from $2.706 to $2.934.

By Dean Rogers

For the past eight weeks September WTI crude oil futures have closed lower, and the decline is quickly approaching major support at $42.5. Many pundits claim the sky is falling, but it is usually at times like this that the market will finally find support and at least attempt to make a bottom.

We have discussed $42.5 as major target and potential bottom in our weekly blog update and in our detailed crude oil forecast for several weeks. There is no definitive evidence that the move down is going to end, but on Monday a few positive signs formed that indicate an extended upward correction may take place.

Monday’s bullish engulfing line, exhausted daily KasePO and KaseCD momentum, weekly divergence setups, and the intraday wave up from $43.35 all show that the upward correction may test $45.9 and possibly $47.5 before the decline continues.

For now, there is no evidence that this will be a major correction, not yet at least, but the fact that the market is starting to show some positive signs of life could mean the move down will end soon.

That said, important resistance was met at $45.01, so we expect to see a pullback to $44.3, Monday’s midpoint, in early trading Tuesday. A close below $44.3 would negate many of the aforementioned positive factors and open the way for $42.5 to finally be met.

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.

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.

by Cynthia A. Kase

Read on TraderPlanet.com

The CBOE Volatility Index, or VIX, has been chopping around erratically, oscillating between lows in the 11.4 to 11.8 range and testing highs generally in the mid to upper teens, but occasionally spiking fitfully into the low 20s. Resistance at 17.19 was tested twice earlier this year, and from late June to early July there was a two week spike that formed an island reversal, leaving first an up gap into the first week, and then a down gap following the second. The jump seems to have been due to market hysteria, (hence the nickname Fear and Greed Index) as opposed to real, supportive factors. Neither week closed over 17.19 resistance. Since then swing lows at 11.71 and 11.82 were made, with an intervening 16.27 high. This high failed to meet the top of the daily gap at 16.60.

No Clear Trends for VIX

The VIX has oscillated up and down, sustaining a direction for no more than a couple of weeks or so, and failing to establish a trend or even a clear corrective pattern. On the very short-term charts, the activity since July 29 looks like a bearish correction, but that could mean little more than a retest of the lows.

The downside target ranges from 11.3 to 11.8 with a median of 11.5. If the small correction plays out in a standard manner, the swing low of 11.82 will be broken at least to some degree, with a slight bias towards hitting the lower end of the range. The reason is that earlier waves from 25.2 and 16.7 have extensions that calculate to 11.8. More recent waves from 13.55 and 13.22 drop that to about 11.4, which is probably the most likely outcome, but only marginally.

If the VIX were to surprise us by cleanly breaking and remaining below 11.3, then a retest of the historical 2006 low, around 9.3 would be called for, with interim support at 10.8. Given the irregular wave patterns, there’s nothing intrinsic in the structures calling for this to happen.

On the upside the crucial level is 14.4, the 62 percent retracement of the aforementioned decline, and July’s monthly open. 14.4 is highly confluent for the waves up from both 11.71 and 11.82. These also show targets at 17.5, just above the earlier 17.19 resistance. A sustained close over 14.4 if not contained by 17.5; would probably mean that more extreme values in the 24.5 area, become likely.

Recommended VIX Trading

If I were looking to get long the VIX, I would not allow myself to become overly “vexed” by a retest of the lows, and only would be concerned if there were sustained closes below 11.3. I’d look for a bounce from that retest, or if that doesn’t happen, a close over 14.4, to time in. Optionally, I might sell a put below 11.3 and buy a call above 14.4, or use those values as a base from which to set my range. Given the levels at which the VIX has traded historically, it has much more upside to vex the bears, than the reverse.

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.

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

WTI Crude Oil Forecast: Testing Major Support at $37.9

Tag: Technical Analysis

No Clear Trends for VIX

Recommended VIX Trading