WTI Crude Oil
The WTI Crude Oil market gapped higher at the open on Monday, and then slammed into the previous uptrend line. However, the fact that we closed towards the top of the candle is a very strong sign, so I think it’s going to be difficult to continue to go higher. I also recognize that the $50 level above will be massively resistive. If I can find some type of exhaustive candle in this area, it would make a lot of sense that the market would pull back and reach towards the gap that previously formed. Given enough time, I believe that the sellers returned because quite frankly the oversupply continues to weigh upon the market. When we give the market a push to the downside, I suspect that we will not only fill the gap, but probably reach towards the $43 level. Although the market looks very likely to see buyers in the short-term, I just can’t bring myself to start buying a market that has so many things working against the longer term.
Natural Gas
The natural gas markets initially fell on Monday but found enough support to continue the move higher. Energy in general had a strong day, but I also recognize that the $3 level above is psychologically resistant. The cold weather has arrived to the northeastern part of the United States which could bring up demand, but quite frankly we have so much in the way of supply that it’s difficult to imagine that the longer-term move will have any sustainability to it, as the demand won’t wipeout the massive amounts of supply. Also, you have the previous uptrend line that could offer resistance, so having said that it’s likely that the sellers will return given enough time, and I’m simply going to wait to see an exhaustive candle in order to start shorting again. I have no interest buying at this point.
