Daily Spot: Energies
A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]
Crude Oil Nov (CLZ) The 81.30 target (highlighted green) had been met already well ahead of Wednesday’s open. The cash session tested it anyway, and probed it down to 80.00.
This also tests the Double Top’s interim consolidation. While its eventual break is likely, which would put into play the next lower target, it has yet to be influential. A lot of selling pressure has been expended aggressively since topping at the 88.45 target. And now the lower-end of a consolidation is being probed, without there being any interim corrective bounce.
Double Tops with interim upsloping consolidations are accidents waiting to happen. The path lower may be delayed, and this is an opportune time for that. But the pattern’s ultimate resolution is down.
Natural Gas Nov (NGZ) Monday’s open or close could have retraced all of Friday’s loss (from horizontal green solid line). Tuesday’s open could have sufficed. But Friday’s loss has been recovered too late to reject Friday’s loss.
A rally can no longer be a reaction to the decline. It must be wholly of its own accord. The price trigger happens to be the same – a close above 3.92 – but the pattern has changed. Two days of consolidating under 3.92 have created a new pattern.
Wednesday’s gap up to and through 3.92 Monday or Tuesday would have signaled the downleg recovering. Recovering it Wednesday means a new upleg may be forming. Being the first day of a breakout (not a reaction), a second consecutive higher close is needed to confirm. Not confirming Thursday, after all of the extra selling pressure, would be bearish.
Dollar Basket Dec (DXZ) Monday’s breakout and Tuesday’s confirmation had bought the rally an opportunity to retrace and refuel buyers. Reaching an important target Tuesday helped. Wednesday’s dip was relatively shallow, especially on a closing basis. A further dip may be required Thursday morning. But the rally should be trying one more time otherwise.
Gold Dec (GCZ) The filled gap at 1337.60 didn’t indicate that sellers were losing traction. Price action there simply did not reflect accumulation. A bounce of some sort to some degree still seems likely before resuming the decline to target a retest of October’s 1320.00 lows.
30-year Treasury Dec (USZ) Tuesday’s rally didn’t much improve Wednesday, but neither was it rejected. And its session high stopped just short of filling the gap outstanding from Friday’s close. The corrective bounce should still extend up to 128’03-128’14, possibly higher, before the decline resumes.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).