Technical Analyst, Saxo Bank
Summary: Dutch Gas is in total collapse taking out key support. Could be headed for sub-40
Henry Hub Natural Gas bouncing but can it get upside traction or resume downtrend?
Brent and WTI Crude oil could be reversing down trend. Both close to test key resistance levels
Gasoline has reversed down trend and is set for higher levels. Is Gasoline the canary in the coalmine for oil
Today's Saxo Market Call podcast.
Today's Market Quick Take from the Saxo Strategy Team
Dutch Gas has taken out support at around 62.52 and is headed for next support at around 48.22 but is likely to drop to stronger support at around 39.90. RSI below 40 i.e., negative sentiment supports the bearish outlook that is likely to take Dutch Gas lower.
200 Weekly SMA currently at 52.57 will provide some support but the support at 48.22 is not that strong. Weekly RSI is below 40 for the first time since 2020 indicating new lows are likely.
For Dutch Gas to reverse this bearish scenario the first indication would be to close back above 88.75
Henry Hub Natural Gas reached 1.382 projection of the latest correction and has at the time of writing jumped back above support at 3.53.
Weekly RSI is below 40 but there is no divergence indicating we could see Natural Gas trading lower. If Natural Gas takes out last weeks low at 3.38 it could be hit by another sell-off down to 2.86 or even to strong support at 2.41
Brent Crude oil is still trading in a wide falling channel but the latest selling in early January didn’t perform a new low which could be an indication of a trend exhaustion. A close above 87 AND a close above the upper falling trend line will be next strong indication of a trend reversal that could take Brent to around 98. That scenario will be further confirmed if RSI closes above 60 threshold.
However, the 200 daily SMA is coming down providing resistance and could cut short the uptrend to the 0.786 retracement of the latest and exhaustive sell-off and the 0.382 retracement of the entire downtrend at around 94.30.
If that scenario does not play out (Brent closing above 87) Brent is set to continue lower and likely to once again break below support around 77 and a move towards strong support at around 69.24
WTI Crude oil is testing medium-term falling trendline and 55 daily SMA. RSI is still below 60 threshold for turning positive. If WTI closes above 81.50 the downtrend has reversed short-term and could start a rally up to resistance around 93.48 where also the 200 daily SMA is providing resistance. That 200 daily SMA resistance could cut short the uptrend to the 0.786 retracement at around 88.68 or the 0.382 retracement of the entire downtrend since July 2022 at around 90.56
If WTI fails to close above 81.50 and RSI is rejected at 60 threshold, the bear trend is set to resume. WTI could drop to the 70 level but further weakness down to 68.60-64.45 could be seen.
Is Gasoline the Canary in the coal mine? Gasoline has broken above falling trendline and closed above resistance at 252.33 and is now in a bullish short-term trend. RSI is above 60 confirming that picture.
2024: The wasted year
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With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.