Energy markets were on fire the past several weeks. Inclement weather in
Bad US economic data has knocked back the US Dollar, which has allowed commodities priced in dollars to appreciate in value. The precious metals complex is a good example in recent days. Energy markets were over the past three to four weeks. Despite further progress made by energy markets as Federal Reserve Chair
Trading since the second quarter of 2013 has resulted in a consolidation, with the more recent triangulation in price denoted on the chart with the red trendlines. Crude oil prices easily broke through the triangle resistance, but now faces potential parallel resistance. We have derived this expected level of resistance at
First, an inverted hammer formed, which is a single candle bearish reversal signal. The candle illustrates the psychology of the market during that specific period: bulls looked for continuation, but profit taking and/or new sellers ultimately closed price lower on the day. A new high at
Therefore, with the uptrend remaining in place and the recent price action starting to look less bullish, it is possible that a breather unfolds. On any sell off,
North American 8-14 Day Forecast: Temperature Probabilities
The rally in crude oil the past few days hasn't been matched by excitement in natural gas. Even as the
Warming temperatures means that demand for natural gas could fall. If demand for natural gas falls, price could pull back. Demand is the primary fundamental reason for NGAS strength in January: 241 billion cubic feet (bcf) were consumed, more than any month ever. January saw the coldest temperatures recorded ever across the northern parts of the country - a good reason to be buying heating oil!
The problem for natural gas now is two-fold. First, the fundamental reason for gas to rally may be waning now that temperatures are forecasted to rise. This may be provoking the second problem: the potential for a blow off top as the weekly chart below shows.
The weekly candle just over halfway through this week is more or less a Doji. But the developing weekly candle comes after a major reversal candle. The inverted hammer on the weekly chart was engulfing in nature. This has led to a "sell" signal on the Slow Stochastic indicator. The Slow Stochastic indicator has also recently put in a series of lower highs relative to higher highs in price, which is divergence.
Traders' attention should be on