Technical analysis is a critical tool for traders and investors in the commodity markets, providing insights into price movements and potential future trends. This approach relies on historical price data, chart patterns, and various technical indicators to forecast market behavior.
The Energy Information Administration (EIA) reported an increase in crude oil inventories of 0.545 million barrels, surpassing predictions but still suggesting a trend of slowing demand. In contrast, the American Petroleum Institute (API) indicated a significantly larger buildup of 4.753 million barrels, well above expectations. Despite these figures, market focus has shifted to the rising tensions between Russia and Ukraine, which are overshadowing the potentially bearish implications of the inventory data. Currently, WTI crude oil (CL) is consolidating around $69, while Brent oil (BCO) is holding steady at approximately $73.
Natural gas prices are currently at $3.21, reflecting a 4.44% increase. This rise is driven by forecasts of colder weather expected from late November into early December. According to predictions by Maxar Technologies, a substantial drop in temperatures is anticipated, leading to heightened heating demand. Additionally, an increase in electricity generation is further elevating the demand for natural gas. This combination of factors has pushed prices past critical resistance levels, signaling the beginning of a strong long-term bullish trend.
WTI crude oil is currently consolidating within a bearish pattern. Support is identified in the range of $66 to $67, while resistance levels are set at $71, $74.20, and $79.90 according to the trend lines. The bearish trend is likely to persist as long as the price stays below the 50-day and 200-day SMAs. Additionally, the RSI is holding below the mid-level, indicating a potential for continued downward momentum.
The price of Brent oil is currently trading within a descending broadening wedge pattern, which highlights the prevailing bearish momentum. The downward trend line within this formation reinforces this outlook. Additionally, the RSI is positioned below the mid-level, further supporting a bearish perspective. However, a break above the 200-day SMA at $80 could alleviate some of the bearish pressure and potentially trigger the next upward move.
The price has broken out of an 11-month triangle pattern and reached a strong resistance level at $3. A move above this level could set the stage for a rise to $3.40, which is a resistance point identified in January 2024. Furthermore, breaking above $3.40 could lead to significantly higher natural gas prices. The formation of a double bottom around $1.90 and $2.20 suggests bullish price action, increasing the likelihood of sustained upward momentum.
When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.
Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
