CRUDE OIL:
Crude Oil has continued its move lower from last week and has shown weakness all of this week. It formed a Head & Shoulder which materialized and moved towards the $47 region where it found support. At this moment, the Crude Oil on the daily is slightly extended and we could see a couple of days of digestion of the entire move. Crude Oil ended the week strong with a hammer doji and a strong tail.
On the weekly, we see a spinning top doji which broke to the downside. It is also important to note that the week’s close was below the close of the previous week which indicates a move lower. It is very important for Oil to stick to the channel, a break of which would trigger prices as low as $42.We also see price rejection on the weekly chart and a Head & Shoulder forming. When there is price rejection, every time it gets close to a pivot, we generally see a move lower. Crude Oil could be headed to the channel near the $44-$46 region. If it is unable to sustain there, we could easily see sub $40 prices.
NATURAL GAS:
Natural Gas was in sell-off mode this entire week. It gapped below support and continued its journey lower from there. It has taken a breather at the very important $3 region where it has found some support.
We may see Natural Gas move towards the 3.15-3.2 region as a relief rally where it could continue it’s move lower. Natural Gas also put in an inside bar and has a potential trade setup to go long once the 3.05 region is broken to the upside. For the longer term, things look very weak for Natural Gas and it looks like we might see $2.5 over the next couple of months.
