Daily Spot: Energies
A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]
Crude Oil Jan (CLF) Tuesday’s gap down had closed under the morning’s low, signaling that momentum was reversing down. Confirmation was still needed Wednesday, simply by not recovering 85.15. It was recovered, and then some, by the open gapping up to 85.37.
Providing all elements of a signal without triggering it can signal the opposite. More so after invalidating a triggered signal. That’s how Tuesday’s trapped shorts were squeezed Wednesday to fuel a rally through the balance of the session. It extended intraday to 86.95, just short of retesting 87.10 resistance.
There is no requirement to fill the gap above 88.00 before resuming the decline. Filling it anyway would likely also probe 89.00 resistance.
Natural Gas Jan (NGF) A substantial recovery Tuesday back to 4.31 would confirmed Monday’s drop was only a correction. But Tuesday only dipped further. Its intraday low was recovered to close back above Monday’s low, signaling that sellers didn’t gain traction for their efforts. That gained another day for buyers to perform.
A strong open Wednesday would signal that buyers were exploiting the hesitant sellers. The open did gap up slightly, and it extended higher to test 4.31 at the session high. The rally’s health doesn’t depend upon extending higher without delay. Most important was just to prove that Monday’s drop had not gained traction.
The pullback’s bottom formed an inverted Head & Shoulders pattern. A pullback to its neckline should resume the rally the following day. Regardless, EIA reports Wednesday morning, so closing the session above 4.31 would set the tone for a rally into and out of the weekend.
Dollar Basket Dec (DXZ) Tuesday’s “ineffectual optimism” warned of an impending correction. Rather than reject fresh highs first to trigger a 3-5 day correction, Wednesday’s open gapped down into Tuesday’s range. The impatient selling should help the correction to run its course within 1-2 days. Recovering from probes under 80.70 and 80.50 would signal the correction had ended.
Gold Feb (GCG) Buyers didn’t gain traction Tuesday because the session’s intraday highs in the afternoon highs were retraced to close back under the morning’s high. Wednesday’s gap up also probed fresh highs in the morning and again in the afternoon. But Tuesday’s high was still not recovered into Wednesday’s close. It’s still not a sell signal, which would be triggered by closing under 1381.00. Extending higher could fill the gap back to 1407.00.
30-year Treasury Mar (USH) Tuesday’s “ineffectual optimism” could have extended higher temporarily Wednesday. But the open already gapped down. Bad news thtoughout the day drove price sharply lower. Last week’s overly optimistic bounce that originated above 124’18 was fully retraced. This was expected in the context of the retracement extending down uninterrupted. Next lower low is targeting 123’02-123’06.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).