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Tick Tock... Energy Commodities Must Rally Immediately to Avoid New Downdrafts


Crude oil and natural gas have reached stages where rallies must begin without delay.

The following are the latest daily summaries of my ongoing intraday coverage, providing context to interpret price action. Any prices listed are for a contract's current "front month." Their direction tends to correlate with any ETFs listed for each.

Today's Highlight: Energies commodities like crude oil and natural gas have not begun trending up. But they have reached stages where rallies must begin without delay. Otherwise, crude oil will likely begin another downdraft, while natural gas extends the downdraft it is already in.

Dollar Basket
Having avoided a reaction down Tuesday from retesting Monday's highs, the rally extended Wednesday to attack its 83.35 target within $.10.

Jun Contract EC; (NYSEARCA:FXE)
Having avoided a reaction up Tuesday from retesting Monday's lows, the decline extended Wednesday to begin testing its 1.2955-1.3020 target.

Aug Contract GC; (NYSEARCA:GLD)
While any sort of rally was still premature when there remained potential for fresh lows to test 1262.00, Tuesday night's plunge down to 1223.20 certainly was not part of a bottoming pattern. The 1248.00 corrective bounce limit was tested into the open, and largely retraced into the afternoon. Closing above 1254.00 would signal a corrective bounce underway targeting 1279.00, but there is otherwise no active signal.

Jul Contract SI; (NYSEARCA:SLV)
The 18.88-19.00 objective was finally met Tuesday night, and then broken sharply on the way down to 18.36. The reaction up held 18.88-19.00 before reversing back down to test 18.65. Back above 19.25 would signal momentum reversing up, but there is no requirement to recover.

30-year Treasury
Sep Contract US; (NYSEARCA:TLT)
The 135-00 bounce limit was tested through Wednesday morning and then again in the afternoon following a dip to 134-09. Trending higher Thursday without delay would be credible for launching a multi-point corrective bounce.

Crude Oil
Jul Contract CL; (NYSEARCA:USO)
Wednesday morning's deep pullback to 93.70 was retraced entirely back to its 95.55 origin. The slingshot effect now requires almost immediately extending up through 96.00 and to fill the gap back up to 98.45-99.00, unless something much more bearish is developing.

Natural Gas
After gapping up slightly, Wednesday's session was spent entirely in positive territory. The gap back to Tuesday's close was filled, but only 38.2% of Tuesday's drop was retraced. The "ineffectual optimism" is potentially bearish from a contrarian perspective, especially ahead of Thursday's EIA data. At least Tuesday's breakout close wasn't confirmed by a second consecutive lower close, so a new low testing 3.55-3.62 would be credible for ending the decline.

Editor's note: Rod's analytical techniques are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He applies his techniques live intraday, primarily to S&P futures, at RodDavid .com.
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