Macro: Sandcastle economics
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Technical Update - Gas price correction likely to be over. Oil finding support, can it rebound? Collapse in Emission close to a bottom?
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Dutch TTF Gas has bounced from 0.618 Fibo retracement at €178.42 of the entire uptrend since mid-June. Twice closing above 187.50 the correction in Dutch Gas is likely to over and uptrend to resume.
RSI is bouncing from 40 threshold meaning it is still in positive sentiment and there is no divergence. No divergence indicates Gas could see higher levels – higher than the 342 recorded in June. Resistance around 242.72 and 280.64
If Dutch Gas closes below 181.35 it will put the uptrend scenario on pause – at least short-term – and result in a drop to strong support at 152.
Henry Hub Gas seems to resume uptrend above its key support at 7.55. If Henry Hub closes above $9 August peak around $10 is likely to be tested and broken.
That scenario is likely to play out if RSI closes above its falling trend line.
If Henry Hub gas closes below 7.55 the current correction is likely to turn in to a bearish move down to around the 0.764 retracement and 200 SMA around 6.44.
Brent Crude oil have found support at $87.70. The trend is still down however, and Brent needs to close above the falling trend line to indicate a trend reversal.
RSI is showing divergence indicating a weakening of the down trend and a rebound to around $100 and the falling trend line could materialize. If Brent does break above the falling trend line there is strong resistance at around 105.45. First indication of that scenario could play out a break above 97 is needed.
If Brent closes below 87.70 the bear trend is to be extended down to the 0.764 retracement at 83.40. but lower levels are not unlikely. If sellers can push Brent to close below 83 a d total collapse to around 70 is not unlikely
WTI Crude oil is bouncing from support at around 81.90. However, the trend is still down and there is no divergence on RSI indicating we could see lower lows. For WTI to reverse the down trend is must close above resistance at 97.66. A break above 90.40 will strongly indicate that the 97.66 resistance is to be tested.
If WTI closes below 81.20 bear trend is to be extended to 78.48 – 74.27.
If WTI closes below 81.20 bear trend is to be extended to 78.48 – 74.27.
Carbon Emissions collapsed totally after breaking below 0.764 retracement of the last uptrend and rejection of the peak in August, reaching 1.382 projection of the “Boom and Bust” move.
RSI is at a value just above 20 where last time it reached that Carbon Emission prices rebounded. Perhaps we are seeing identical scenario this time resulting in Carbon prices to bounce to around €75.
However, the trend is still down and if Carbon breaks below last weeks low at 65.55 it could drop to the 0.618 projection at 60.82 but a move down to around March lows at 55 is not out the question.
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