WTI Crude Oil
The WTI Crude Oil market fell a bit during the trading session on Monday, testing the $65 level. That of course is an area that has a lot of psychological importance to it, and of course the resistance that we had seen before. I think that bouncing from that level suggests that we are going to see buyers jump back into the market rather soon. Hedge funds are piling into crude oil, despite the overbought condition. I think that pullbacks of this point should continue to offer value the people are willing to take advantage of, and I think that the $63 level is a bit of a floor. If we break down below the $63 level, it’s likely that the $60 level will be targeted next. Longer-term, if we rally from here it’s likely that the market goes to the $67.50 level, and then eventually the $70 level. The US dollar has been very soft as of late, and that of course continues to help.
Natural Gas
Natural gas markets initially fell during the day on Monday, but then turned around to form a hammer. This is a very impressive candle, and it looks as if we are trying to break above the $3.50 level. That’s an area that should be massively resistive, and a break above there could free this market to go much higher. However, volume continues to drop as we reach towards these high levels, so I think it’s only a matter of time before we fall. A breakdown below the bottom of the hammer is a cell signal, so essentially, I am willing to short this market below the $3.30 level. At that point, I suspect that we are going to go down to the $3.10 level underneath, and area that has been important.
