Crude Oil and Natural Gas Technical Outlook For Wednesday Morning

Nymex Crude Oil (CL)

Crude oil dipped further to 76.76 but recovered strongly since then. Downside momentum remains unconvincing with 4 hours MACD staying above signal line and intraday bias is still neutral. Nevertheless, note that another fall is expected as long as 79.62 minor resistance holds and below 76.76 will target 83.95 towards 61.8% retracement of 68.59 to 83.95 at 74.46. But downside should be contained there and bring rally resumption. On the upside, above 79.26 minor resistance will flip intraday bias back to the upside for retesting 83.95 resistance first. Further break of 83.95 high will target upper trend line resistance at 87/88 level again. However, note that sustained trading below 74.46 fibo support will argue that rise from 68.59 has completed and will turn focus back to this key support level.

In the bigger picture, whole medium term rise from 33.2 is still in progress but after all, there is no change in the view that it's merely a correction to fall from 147.27. Therefore, we'd continue to look for reversal signal in case of another rise and as crude oil approaches 50% retracement of 147.27 to 33.2 at 90.24, which is close to 90 psychological level. On the downside, however, considering continuous bearish divergence condition in daily MACD, a break of 68.59 support will confirm that a medium term top is in place and will turn outlook bearish for a retest on 33.2 low as correction from 147.27 resumes.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Natural gas' sideway consolidation is still in progress and intrady bias remains neutral. With 5.850 minor resistance intact, another fall cannot be ruled out. Below 5.354 will bring deeper pull back towards 61.8% retracement of 4.157 to 6.108 at 4.902. On the upside, break of 5.850 minor resistance will indicate that pull back from 6.108 has completed and will flip intraday bias back to the upside for a retest on 6.108 resistance.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005 and might have completed at 2.409 already. Rise from 2.409 is still in progress and should target 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. On the downside, break of 4.157 support is needed to indicate that medium term rise from 2.409 has completed. Otherwise, outlook is neutral at worst even in case of deep pullback.....Nymex Natural Gas Continuous Contract 4 Hours Chart.

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Crude Oil Falls as Dollar Strengthens, U.S. Inventories Forecast to Gain

Crude oil fell in New York on concern China may step up efforts to curb credit growth and on a forecast stockpiles in the U.S. will increase. Oil also pared some of yesterday’s gains as the dollar strengthened against the euro, reducing the appeal of commodities as investments. Chinese regulators asked some of the nation’s banks to limit lending after banks lent a record 9.59 trillion yuan last year and stocks surged. U.S. crude inventories probably climbed for a third week through Jan. 15, according to a Bloomberg News survey before an Energy Department report tomorrow.

“The speculation in stocks spooked the Chinese government, they don’t want to create a bubble,” said Gordon Kwan, head of regional energy research at Mirae Asset Securities Ltd. in Hong Kong. “Oil price will drift between $78 and $82. If the dollar continues to rise, it will have an impact on oil in the second quarter.” Crude oil for February delivery fell as much as 65 cents, or 0.8 percent, to $78.37 a barrel on the New York Mercantile Exchange, and traded at $78.38 at 1:06 p.m. Singapore time. February futures expire today. The more-active March contract declined 63 cents, or 0.8 percent, to $78.69.

Yesterday, the February contract gained $1.02, or 1.3 percent, to settle at $79.02 a barrel. Trades were combined with those from Jan. 18 because of the Martin Luther King Jr. holiday in the U.S. The dollar climbed to $1.4214 per euro as of 1:05 p.m. in Tokyo from $1.4288 yesterday in New York. It earlier strengthened to $1.4188, the highest level since Sept. 1.....Read the entire article.

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You’ve Lost That Bullish Feeling

You lost that bullish feeling, lost the bullish feeling. You’ve lost that bullish feeling now it’s gone, gone, gone.

The petroleum complex lost that bullish feeling failing to build upon that cold weather inspired bullish promise. After starting the year like a bullish gangbuster the oil markets seem to be coming back to earth as the supply side just gets harder to ignore. Crude ended last week on a 5 day losing streak as US inventories increased and the International Energy Agency added to the building bearish momentum and the key area for oil to take out is the 7700 a barrel range. Now the March contract has the bulk of the open interest and the market seems to fail to take out major support point during these roll over periods but the clock seems to be running out on the oil bulls.

Let’s face it, if you are very bullish what are your bullish arguments? The best one is China demand growth. Yet since China seemed to take steps to slow the economy by raising reserve requirements on their banks, that seemed to take some of the sting out of your best bullish argument. Yet overnight the Wall Street Journal reported that the Chinese Premier Wen Jiabao said that the [Chinese] government plans to maintain "reasonable and ample" money and credit supply in the first quarter, signaling it is unlikely to adopt drastic tightening measures before the domestic economy recovers further. Those comments seemed to give oil a bit of a bounce after testing the $77 a barrel range.

Mr. Wen also said Beijing aims to curb speculative property purchases as part of efforts to promote a healthy and stable development of the domestic property market. Wow, why didn’t Barney Frank think of that? He also said that China's government will take steps to ease energy supply bottlenecks in the first quarter and stabilize agricultural product price rises. Agricultural prices rises. Is that not inflation? Oops, I forgot to exclude food and energy.....Read the entire article.

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Where is Crude Oil Headed on Wednesday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Crude Oil Closes Higher But Remains Below 20 Day Moving Average

Crude oil closed higher due to short covering on Tuesday as it consolidated some of last week's decline but remains below the 20 day moving average crossing at 79.24 as it consolidated some of last week's decline. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain bearish despite today's rebound signaling that sideways to lower prices are possible near term.

If February extends last week's decline, the 62% retracement level of the 2008-decline crossing at 75.85 is the next downside target. Closes above the 10 day moving average crossing at 80.97 would confirm that a short term low has been posted.

First resistance is the 20 day moving average crossing at 79.24
Second resistance is the 10 day moving average crossing at 80.97

First support is today's low crossing at 76.76
Second support is the 62% retracement level of the 2008 decline crossing at 75.85

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Natural gas closed lower on Tuesday but the mid-range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are turning neutral to bullish hinting that additional short covering is possible near term.

Closes above last Thursday's high crossing at 5.804 would temper the near term bearish outlook in the market. If February extends last week's decline, the 50% retracement level of the December-January rally crossing at 5.314 is the next downside target.

First resistance is last Thursday's high crossing at 5.804
Second resistance is the reaction high crossing at 6.108

First support is last Tuesday's low crossing at 5.354
Second support is the 50% retracement level of the December-January rally crossing at 5.314

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The U.S. Dollar closed higher on Tuesday and above the 10 day moving average crossing at 77.40 signaling that a short term low has been posted. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 77.79 are needed to confirm that a short term low has been posted. If March renews December's decline, the 50% retracement level of the November-December rally crossing at 76.66 is the next downside target.

First resistance is the 20 day moving average crossing at 77.79
Second resistance is the reaction high crossing at 78.44

First support is last Wednesday's low crossing at 76.74
Second support is the 50% retracement level of the November-December rally crossing at 76.66

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Oil Falls to a Three Week Low as Dollar Climbs Versus Euro

Crude oil fell to the lowest level in three weeks as the dollar gained against the euro, reducing the appeal of commodities. Oil dropped as much as 1.6 percent as the greenback climbed against the common currency after German investor confidence declined. A strong U.S. currency curbs demand for raw materials as an alternative investment. “The strong dollar is weighing on prices,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “There’s a growing recognition that the big run up in prices wasn’t strongly based.”

Crude oil for February delivery fell 36 cents, or 0.5 percent, to $77.64 a barrel on the New York Mercantile Exchange. Prices touched $76.76, the lowest level since Dec. 24. February futures expire tomorrow. The more active March contract dropped 44 cents, or 0.6 percent, to $77.93 a barrel. Yesterday’s trades will be combined with today’s because of the Martin Luther King Jr. holiday in the U.S.

“Once the stock market firmed up a bit you saw oil rise from its lows,” said Phil Flynn, vice president of research at PFGBest in Chicago. “We’re back to worrying about the economy. The oil market is following anything that gives us an idea of where the economy is going.” The Standard & Poor’s 500 Index increased 0.7 percent to 1,144.02. Oil futures dropped 5.7 percent last week, the first weekly decline in five, after U.S. crude oil and fuel inventories rose.....Read the entire article.

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Crude Oil and Natural Gas Daily Technical Outlook For Tuesday

Nymex Crude Oil (CL)

With 4 hours MACD crossed above signal line, intraday bias is turned neutral for the moment. Another fall could still be seen as long as 79.26 minor resistance holds and below 77.07 will bring resumption of the correction from 83.95 towards 61.8% retracement of 68.59 to 83.95 at 74.46. But downside should be contained there and bring rally resumption. On the upside, above 79.26 minor resistance will flip intraday bias back to the upside for retesting 83.95 resistance first. Further break of 83.95 high will target upper trend line resistance at 87/88 level again. However, note that sustained trading below 74.46 fibo support will argue that rise from 68.59 has completed and will turn focus back to this key support level.

In the bigger picture, whole medium term rise from 33.2 is still in progress but after all, there is no change in the view that it's merely a correction to fall from 147.27. Therefore, we'd continue to look for reversal signal in case of another rise and as crude oil approaches 50% retracement of 147.27 to 33.2 at 90.24, which is close to 90 psychological level. On the downside, however, considering continuous bearish divergence condition in daily MACD, a break of 68.59 support will confirm that a medium term top is in place and will turn outlook bearish for a retest on 33.2 low as correction from 147.27 resumes.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

No change in outlook of Natural gas as sideway consolidation continues. With 5.850 minor resistance intact, another fall cannot be ruled out. Below 5.354 will bring deeper pull back towards 61.8% retracement of 4.157 to 6.108 at 4.902. On the upside, break of 5.850 minor resistance will indicate that pull back from 6.108 has completed and will flip intraday bias back to the upside for a retest on 6.108 resistance.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005 and might have completed at 2.409 already. Rise from 2.409 is still in progress and should target 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. On the downside, break of 4.157 support is needed to indicate that medium term rise from 2.409 has completed. Otherwise, outlook is neutral at worst even in case of deep pullback.....Nymex Natural Gas Continuous Contract 4 Hours Chart.

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Demand Concerns, Stronger Dollar Push Oil Sharply Lower

Crude oil was slightly higher due to light short covering overnight as it consolidates above the 50% retracement level of the December-January rally crossing at 77.41. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If February extends this month's decline, the 62% retracement level of the aforementioned rally crossing at 75.85 is the next downside target. Closes above the 10 day moving average crossing at 80.52 are needed to confirm that a short term low has been posted.

Tuesday's pivot point, our line in the sand is 78.00

First resistance is the 20 day moving average crossing at 79.38
Second resistance is the 10 day moving average crossing at 80.52

First support is the overnight low crossing at 77.07
Second support is the 62% retracement level of the December-January rally crossing at 75.85

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Natural gas was lower overnight as it extends last Thursday's decline. Stochastics and the RSI are neutral signaling that sideways to lower prices are possible near term.

If February renews this month's decline, the 50% retracement level of the December-January rally crossing at 5.314 is the next downside target. Closes above the 20 day moving average crossing at 5.723 would temper the near term bearish outlook in the market.

Natural gas pivot point for Tuesday is 5.606

First resistance is the 10 day moving average crossing at 5.675
Second resistance is the 20 day moving average crossing at 5.723

First support is last Tuesday's low crossing at 5.354
Second support is the 50% retracement level of the December-January rally crossing at 5.314

Just click here for your FREE trend analysis of UNG

The U.S. Dollar was higher due to short covering overnight as it consolidates some of last week's decline. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 77.78 are needed to confirm that a short term low has been posted. If March renews the decline off December's high, the 50% retracement level of the November-December rally crossing at 76.66 is the next downside target.

First resistance is the overnight high crossing at 77.56
Second resistance is the 20 day moving average crossing at 77.78

First support is last Wednesday's low crossing at 76.74
Second support is the 50% retracement level of the November-December rally crossing at 76.66

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How to Trade Crude Oil and other Commodity ETF’s

Whether you are trading stocks, ETFs or futures, technical analysis is the preferred choice for short term traders. Technical analysis in short is the study of price and volume movements on charts. It can be used for studying charts in any time frame whether you are a 1 minute chartist or a long term investor using monthly charts.

Using technical analysis in my opinion really opens the door for a trader to lower his/her overall risk when investing money. I always like to know if the investments I am watching are trading near a critical price level (support or resistance). During these times you can take positions that have very clear entry and exit points for trading. Also it puts the odds in your favor when a position is entered in the same direction of the underlying trend.

Price action is how we make money in the market, so I strictly follow price and volume when trading as they are the least lagging indicator on what the market it doing.

I have put together a few charts using commodity ETFs to show you what I am seeing in the market and what we should expect to see in the coming days.

USO Crude Oil Fund – Daily Trend Chart
Oil has slid lower the past 5 sessions and is now nearing a support level. This has me looking for an oversold bounce with the potential to rally much higher. I am keeping an eye on this for any possible low risk setup.



UNG Natural Gas Fund – Daily Trading Chart
While UNG is not a great intermediate and long term fund to invest in, I do find it trades very nicely for intraday and short swing trades. I am neutral on natural gas for the time being. It could go either way from here and I’m not willing to take on a 50/50 probability trade. Let’s wait for something exciting to form.



Commodity Trading Conclusion
In short, gold and silver have been underperforming the market recently which is not what we want to see. They have led the market higher all year but are now taking a breather.

The way I see gold, silver, oil and natural gas is that they are trading below their recent highs and still have more room to fall before landing on a solid support level.

The stock market is now over extended and looks ready for a sharp correction. If this happens we will see commodities drop and test lower prices also.

There is not much we can do right now other than protect our current long positions by tightening our stops. Depending on the strength of the breakdown, there could be a great opportunity for short term traders (60 minute chart traders) to make some quick money. I expect a sell off which will last 3-5 days at the least.

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Chris Vermeulen "The Gold and Oil Guy"



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Crude Oil Daily Technical Outlook For Monday

Crude oil dips further to 70.07 earlier today and recovers. Nevertheless, intrady bias remains on the downside and the correction from 83.95 could still extend further towards 61.8% retracement of 68.59 to 83.95 at 74.46. But downside should be contained there and bring rally resumption. On the upside, above 80.69 minor resistance will flip intraday bias back to the upside for retesting 83.95 resistance first. Further break of 83.95 high will target upper trend line resistance at 87/88 level again. However, note that sustained trading below 74.46 fibo support will argue that rise from 68.59 has completed and will turn focus back to this key support level.

In the bigger picture, whole medium term rise from 33.2 is still in progress but after all, there is no change in the view that it's merely a correction to fall from 147.27. Therefore, we'd continue to look for reversal signal in case of another rise and as crude oil approaches 50% retracement of 147.27 to 33.2 at 90.24, which is close to 90 psychological level. On the downside, however, considering continuous bearish divergence condition in daily MACD, a break of 68.59 support will confirm that a medium term top is in place and will turn outlook bearish for a retest on 33.2 low as correction from 147.27 resumes.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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