Technical Analysis Archives - Page 52 of 60

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.

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.

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 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.

By Dean Rogers

Natural gas continues to oscillate in a range between $2.65 and $2.95 as weather forecasts change from week-to-week. “Sweltering” heat in the US Northeast is the latest reason reported for this week’s price rise.

However, it is important to keep in mind that the shifting weather forecasts and related events have kept the market range bound for the last few months, and even if prices do break higher the move is still corrective of the longer-term down trend.

If I sound skeptical of the move up, it is because I am, but as of Wednesday’s close most technical factors indicate $2.95 may be challenged again. These factors show that the key to testing $2.95 is a close over $2.87. This crucial resistance level was tested a few times on Wednesday. It is the 62 percent retracement of the decline from $2.957 to $2.735, near last Thursday’s midpoint, and a confluent projection for the small waves up from $2.735. A close over $2.87 would call for a test of $2.95, which is in line with the 0.618 projection of the wave $2.656 – 2.957 – 2.735.

KaseX’s buy signal (green diamond) is promising and the pullback from $2.87 held the 38 percent retracement of the move up from $2.735. Look for prices to push above $2.87 in early trading tomorrow and to possibly overcome $2.95 in the event that the EIA storage report is bullish.

Near term support is $2.79, the 62 percent retracement from $2.735 to $2.87. This level should hold provided the move up is going to challenge $2.95. A close below $2.79 would shift the near-term outlook to negative and call for $2.73.

Read on TraderPlanet.com

By Cynthia A. Kase

On Tuesday pundits were aflutter because the US Dollar had an up day, pointing to expectations that the Fed would soon clarify its intentions to raise rates. Technically, Tuesday was a “star” with a very small range, an inside bar which closed well below Monday’s open. It was indicative, at most, of a wait-and-see stance.

Technically, using the US Dollar index, DXY, the dollar, while not “in the doldrums”, isn’t yet robust. From a chart-driven standpoint, the market’s longer-term structure, viewed from March’s 100.39 high is negative. After five down days, prices are sitting on support. There must be a sustained close over 98.46 to give the dollar a boost.

The move up from 93.13 is a zig-zag abc pattern, where wave a equals wave c. Thus the upward correction could be complete having fulfilled a normal objective at 98.15. Also the second leg of the correction took 22 days, much shallower than the first at eight days. Put another way, it took almost three times as long for an equal increase in prices for wave c. The KaseCD momentum indicator exhibited a negative divergence at the July 21, 98.15 swing high.

For a positive outlook, 95 must hold and resistance at 98.46 overcome, in which case, 100.39 is the target.

Here’s the scoop on 95. The first small wave down from 98.15 projects no lower than 95 as the trend terminus (98.15³/97.11²), 2*1.38 extension, and the corrective Phi³ projection. 95 is confluent as the daily Kase DevStop6 and weekly warning line.

95 is the 62 percent retracement of the entire correction from 93.56, as shown in the table below. (As shown by the strike through, the decline has met the 38 percent retracement.) Finally the wave from April’s 98.46 swing high targets 95 as its minimum extension. So 95 is both a big target and major support. If broken, a decline to 91 becomes probable.

The downward pattern from 98.15, is also a zig-zag with equal waves. That’s supportive, as is the Harami star noted above, along with a bullish divergence on the KaseCD based on a 0.25 Kase Bar intraday chart. As noted, at minimum, 98.46 must be overcome for a recovery to come into view. This is not only the first swing high above 98.15, but also highly confluent for recent up waves. Very importantly it’s the next 1.38 extension for the wave 93.56 – 96.37 – 94.68 that’s already met and extended beyond its 1.0, equal to, objective.

Above 98.4, there’s some resistance at 99, but odds near certainty, then, for 100.39. This is the 1.38 extension (and Phi corrective projection) for wave a of the upward zig-zag pattern, and for the final up wave, 95.45 – 98.15 – 96.29. Above 100.39, the target’s 104.

It’s not yet time to “bet your bottom dollar” on DXY, but to watch the key levels and act accordingly!

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

By Dean Rogers

Crude oil has taken on a strong bearish tone. There is very little technical evidence, and even less fundamental evidence, that the decline is going to end. However, it is almost always darkest before dawn and there are a few factors that show a correction should take place soon.

Last week’s update discussed major support at $47.0 for WTI and September Brent crude oil is quickly approaching major technical support at $52.8. This is the 1.618 projection for $71.37 – 62.3 – 62.49, the 0.618 projection for $67.49 – 55.6 – 59.9, and the lower Bollinger Band. The KasePO, shown in the middle panel of the chart above, and KaseCD, in the bottom panel, are setup for divergence and nearly in oversold territory. These factors indicate $52.8 is a potential stalling point and that a correction might take place before the decline continues to the next targets.

A normal correction will hold $55.6, the 38 percent retracement from $59.9. Key resistance is $57.2, the 62 percent retracement. We expect $55.6 to hold before the next leg lower takes place.

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.

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.

Prompt month WTI crude oil futures briefly fell below $50.0 on Monday and settled at the lowest level since April 2. The deal with Iran has led to fresh concerns about the global supply glut and most technical factors are negative. RBOB gasoline is lending some support, but on balance, the decline is poised to extend into the mid- and possibly low-$40s where the March 18th low of $42.03 would be challenged.

Prices broke lower out of the near perfect intraday bearish flag discussed last week. September WTI futures, which will become the prompt month on Wednesday, also settled below key support at $50.6 on Monday. This was the 1.618 projection of the wave $64.45 – 57.09 – 62.51. This is likely Wave I of a five wave trending pattern that should unfold to at least $47.0 and possibly $42.5. The five-wave pattern is not perfect, but the close below $50.6 and the bottom of Wave III leaves little room for any other interpretation.

When a five-wave pattern forms at least two of the three impulse waves (I, III, or V) should be equal. At $47.0 Waves I and V will be equal and at $42.5 Waves III and V will be equal. Structurally, both $47.0 and $42.5 fit the structure of the five-wave pattern because $47.0 is the 0.618 projection of Wave III, $62.51 – 50.95 – 54.35 and $42.5 is the 2.764 projection for Wave I.

It is important to note that $42.5 is the lowest that the five-wave pattern projects. Therefore, unless the structure of the wave formation drastically changes, it is not likely that prices will fall below $42.5 in coming weeks.

Odds favor the decline, but the market still seems a bit unsure of itself. As stated, there is some support being wrought by RBOB gasoline, but it ended Monday on a negative note by forming an evening star setup. The move down will likely be a grind and small tests of resistance will be commonplace. First resistance is $51.8 followed by $52.8, which is expected to hold. Key resistance is the $54.35 swing high. A close above this would negative the five-wave pattern and open the way for an extended correction and potential recovery to $59.3 and higher.

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.

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.

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.

WTI Crude Oil Forecast: A Few Signs of Life

Tag: Technical Analysis

No Clear Trends for VIX

Recommended VIX Trading