Is the Oil Scenario Up to Date?
The situation in crude oil has not changed dramatically since our last alert. Does this mean that it is not worth reading today’s comments?
On the contrary, you'll find something in it that hasn't been published for a very long time. Check it out for yourself.
Scenario for Crude Oil
Quoting our yesterday’s Oil Trading Alert:
(…) Wednesday's gap was closed, which, combined with the buy signals, is tempting to make a decision. But is it as bullish as it might seem? Please pay attention to the volume. Despite another white candle on the chart, the buyers' involvement in shaping it has decreased for the third time in a row, raising some doubts about the bulls' strength.
Additionally, when we look at the four-hour chart, we see that the bears may be about to go into action. What do I mean?
(…) the price has not yet even reached the 38.2% Fibonacci retracement. Additionally, both the CCI and the Stochastic Oscillator remain in their overbought areas, which suggests that a reversal may be just around the corner, especially considering what we've seen in the past.
Similar levels of indicators could be observed on October 20th. What happened in the days that followed? Another bear march to the south has begun. That's why I think that staying out of the market without any open positions is the best option for now, because the test of the upper border of the yellow consolidation (marked on the daily chart) may be right around the corner.
Looking at the charts, we see that the situation developed in line with the above scenario and crude oil reversed to the south. Therefore, I think it's still worth observing the behavior of both the bulls and the bears in the area of the above-mentioned upper border of consolidation without opening any positions. In my opinion, it's worth waiting for the market to give us some clearer signals.
And now it's time for something the OTA hasn't had in a long time - gas.
Natural Gas - How low can the price go?
Looking at the long-term chart, we see that after months of recovering from losses, the bulls have capitulated to the 50-month moving average. Although we have seen a correction since the beginning of November, the buy signals generated by the indicators remain in place.
But will it be enough to encourage buyers to return? Let's analyze the weekly chart for clues.
From this perspective, we can see more clearly what has stopped the bulls' further northward expansion. The upper boundary of the green growth channel, where the price has been moving since April 2023.
This is undoubtedly a very important line of resistance, which has stopped buyers on several occasions by enticing their opponents to act. In addition, both the CCI and the Stochastic Oscillator generated sell signals, suggesting that further seller pressure must be taken into account.
What, then, can we expect in the time ahead? How low can the price go?
In my opinion, the first target for the bears will be the previously broken 50-week moving average (currently at 2.92). If it bends under the pressure of the sellers, it is necessary to take into account the deepening of the falls even to the lower border of the green rising channel.
Are there any short-term factors that will support the bulls in the days ahead?
Unfortunately, from today's perspective, there aren't many of them... I'd say they're hard to see. There are actually only two arguments on the side of the buyers: the buy signal generated by the Stochastic Oscillator and the reduced volume accompanying the formation of yesterday's bearish candle.
Is that enough to stop the bears? I'm afraid not, and further declines to the above-mentioned levels are only a matter of time.
Nevertheless, since April, the lower line of the green rising trend channel has been acting as a pretty solid support, which is encouraging buyers to come back. So if history repeats itself and we see a clear bullish momentum in the region, we'll consider opening a long position.
Finishing today's alert, I'd like to ask you a very important question: Are you currently interested in any particular energy company? If so, please comment.
See you tomorrow.