Technical Update - Oil bouncing off new lows forming reversal candle. Gas getting traction but needs to break resistance
Kim Cramer Larsson
Technical Analyst, Saxo Bank
During yesterday’s session Brent Crude oil broke below support at $83.65 and the 0.786 Fibonacci retracement at 81.43 but managed to close above forming a Hammer candle which is and indication of a bottom and reversal.
A bullish candle today could signal a reversal from the current downtrend. A reversal that could take Brent to the 0.618 retracement of the November selling at around 92.32.
However, to reverse the medium-term bearish picture a weekly close above 99.56 is needed.
The RSI is showing negative sentiment and but testing its falling trendline. A close above could be an indication of this bounce could turn in to a reversal with higher Oil prices.
However, if selling pressure returns and sends Brent below 82.40 the down is likely to extend down to 77 possibly lower.
WTI crude oil bounced from support at around 74.27 and from the upper side of the upper falling trend line in what seemed like a falling wedge pattern. WTI formed a Hammer candle indicating a bounce that could take WTI to the 0.618 retracement at 86.05.
At the time of writing RSI has broken above its short-term falling trend indicating this bounce could jump a bit higher. However, the falling daily 55 and 100 SMA’s are providing resistance. If WTI slides back below 73.60 there is not much support until around 66-62.40.
For WTI to reverse the medium term down trend a weekly close above 93.65 is minimum requirement.
Dutch Gas broke side ways out of its steep falling wedge like pattern and haven’t really been able to get some upside traction. But maybe this is the time. It has broken out of its triangle like pattern and if Dutch Gas moves higher to close above €147 a new uptrend has been established.
An uptrend with potential to move toa around 175-188.
RSI still showing negative momentum but that will change if it can close above 60 threshold.
If Dutch Gas slides back below it very short-term falling trend line in the triangle like pattern it is likely to test October lows around 92.40
Henry Hub Natural Gas is volatile around $7.18 which was the resistance to break for bullish signal. 200 daily SMA seems to offer support an Henry Hub is set for higher levels. RSI showing positive sentiment supports this picture.
However, that could all be changed if Henry Hub closes back below 6.50 for a test of support around 5.55
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.