Daily Spot: Energies
A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]
Crude Oil Feb (CLG) The two-week old opening gap at 91.10 (circled green) should be filled before a durable downleg can begin. The two immediate sessions following it (highlighted green) were failed sell signals, confirming that sellers weren’t going to gain traction soon. Buyers haven’t rushed to try gaining traction themselves.
The extended range is too narrow to be a base capable of launching a durable rally. But the attraction above, and the inability of sellers, have combined to attract price higher.
The high’s retest alone would not be a sell signal. A reward for delaying the high’s retest is likely to be a slightly higher high, probably to 93.15. That alone would not be a sell signal, either. But a sell signal prior to retesting the highs would not be credible.
Natural Gas Jan (NGF) Last week’s decline bottomed at the 161.8% measurement of the prior week’s Head & Shoulders. This is natural support, if the pattern’s 61.8% target doesn’t hold. The strong rally from there was appropriate for a bottom.
1-2 more strong rallies would have been appropriate, too. Tuesday’s sizable drop threatened instead to extend the decline, and to destroy the multi-month basing pattern that preceded it. A reversal setup Wednesday was required to reinstate the recovery’s potential.
Wednesday’s strong rally recovered from probing the lows, and it closed above 4.11. A close above 4.24 Thursday would be helpful confirmation that Tuesday’s drop was absorbed, and that a new upleg was underway. Thursday’s EIA report could be a catalyst, preferably without the session opening optimistically.
Dollar Basket Mar (DXH) Tuesday’s reversal from negative territory back up to fresh recovery highs had failed to close above the prior session’s high. Buyers did not lose traction, but did need to refuel. Wednesday’s shallow dip could have satisfied that requirement, and renewed buying would be credible for extending higher intraday.
Gold Feb (GCG) Tuesday’s recovery from testing 1381.00 support intraday had closed only modestly positive. This vulnerability to reversing down could be neutralized by extending higher. Wednesday’s session only avoided reversing down. The 1407.00 area’s retest is probably in-play, but any more hesitation to trend up would become vulnerable to another probe under 1381.00.
30-year Treasury Mar (USH) Wednesday’s relatively narrow range held Monday’s lows again as support. A correction underway is targeting at least 123’06. The correction should resume without much delay Thursday, and in obvious fashion, if it remains valid. Any lower low in reaction to econ reports should be recovered almost immediately and converted into an intraday rally.
[/pay]
Share your questions and comments on this post in the blog, or in the chartroom…
Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).