WTI Crude Oil
The WTI Crude Oil market initially tried to rally during the trading session on Monday, but then turned around to fall again. Ultimately, this market continues to recognize the $60 level as important. If we can break down below the hammer from the Friday session, then we could continue to break down. I believe that rallies at this point are a bit suspicious unless of course, we can break above the $62.50 level. If we can do that, then I think we can get some traction to the upside. The market is oversold by about any metric you look at, but quite frankly it’s difficult to catch a falling knife. I think at this point, selling rallies on signs of exhaustion is probably the best way to look at the crude oil market as we continue to see weakness.
Natural Gas
Natural gas markets rally during the day on Monday initially gapping higher yet again. We reached towards the $3.90 level and then rolled over, forming a massive shooting star. This shooting star, of course, is a very negative sign, and I think that if we can break down below the daily candle, we will, of course, get a bit of a pullback. There is a gap below that needs filled, and by any measure that you use, this market is overbought. The $3.50 level is the top of the gap, and that should be the beginning of support. If we break down below there, then we could go even lower, perhaps reaching towards the $3.25 level. Even though the seasonality favors the upside in general, technically speaking we do fill gaps given enough time, and that is very likely what a lot of traders will be looking to do. I believe that the $4.00 level above will continue to be very resistive.
