Technical Technical Technical

Technical Update - Oil indicating bottom and reversal. Gasoline selling weakening. Natural gas on the rise.

Commodities 5 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  Oil futures forming bottom and reversal patterns indicating a rebound. Gasoline selling pressure weakening. Henry Hub rebound facing strong resistance. Correction in Dutch Gas could under way before uptrend resumes. Carbon Emission rangebound in tighter and tighter range. Break out could be imminent


Yesterday Brent Crude oil spiked below Key support at $96.75 and the 0.618 retracement of the December to March bull market, ending the day forming a Hammer candle (open and close price at almost same price and a long shadow/wick at the bottom). IT signals a reversal in the market and if today ends on a higher note i.e. forming a bullish candle we could see a strong bounce in Brent over the next few days, possibly weeks.
Divergence on RSI supports this picture. If RSI closes above its falling trendline it just adds to the rebound scenario. A rebound that could take Brent back to test the rising (black) trendline and the 0.618 retracement around $113.48
If Brent closes below yesterday’s low at $94.53 it will demolish this rebound scenario and Brent is likely to drop to the 0.764 retracement at around 85.76. Minor support at 90.12

Source: Saxo Group

WTI Crude oil spiked below key support at 92.93 rebounding from the 0.618 retracement at 90.71 forming a Hammer candle similar to the one on Brent oil. It was the second day with Sellers and Buyers fighting about the power and it seems like the buyers are to regain power after a couple of weeks with selling pressure.
A bullish day today and especially if WTI closes above 98.20 there is strong indication of buyers are back in control. A control that can take WTI to test the rising (black) Trendline between 107 and 111.
If sellers manage to push WTI to close below 90.61 bear trend will most likely resume and take WTI down to around 81.31

Source: Saxo Group

Gasoline downtrend seems to be near exhaustion. There is divergence on RSI supporting the view of downtrend weakening. However, currently no bottom and reversal pattern meaning still risk of a test of key support at 298.67. However, if RSI closes above its falling trendline AND above 40 threshold it is a strong indication of a trend reversal.

Source: Saxo Group

Henry Hub Gas has rebounded strongly but met overhead resistance at $6.84. A close above is needed for further upside and confirmation of uptrend. If Henry Hub closes below $6 the Natural Gas contract is likely to re-test of support and lows at $5.32.

Source: Saxo Group

Dutch TTF Gas is testing its lower rising trend line. A close below challenges the uptrend. If Dutch gas closes below €152 the trend has ended and likely to reverse.
However, no divergence on RSI indicates higher prices are likely.

Source: Saxo Group

Carbon Emission is trading in a Symmetrical Triangle like pattern. Break out is needed for direction and could be imminent. If breaking out to the downside a move to the lowest level at €77.38 in the triangle is likely but could drop to support at 75. Bullish breakout and Carbon Emission prices should test the peak of the triangle at 92.75 but is likely to move higher.

However, the theory and history of Triangles tells us that after a breakout, prices can move the same distance of the peak to trough of the triangle i.e. €15.37, illustrated by the vertical arrow. That price difference should be added or subtracted to the breakout price. Since we do not know the price at breakout just yet we cannot determine the potential price targets.

Source: Saxo Group
Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.