WTI Crude Oil
The WTI Crude Oil market initially tried to rally during the course of the session on Monday, but found the $32 level to be far too rich. Because of this, the market fell significantly and below the $30 handle. This looks as if the downtrend is going to continue, and in fact if you were to combine both the daily candles for last Friday and Monday, you would have a perfect shooting star. In other words, it is a shooting star that was formed over 48 hours. That means the same thing as a shooting star formed over 24 hours, and that buyers simply could not hang onto the gains that they had reached. The fact that this market is in a downtrend makes me even more comfortable selling as I think we are trying to get to the $25 level given enough time.
Natural Gas
The natural gas markets initially fell during the day on Monday as well, but found enough support near the $2.09 level to turn things around and form a hammer. Because of this, I think we may see a little bit of resiliency in this area, perhaps even a short-term bounce. However, I prefer to sell this market on rallies as they appear, and this potential rally has my interest in selling again. I believe that any exhaustive candle above is reason enough to start shorting, as I think there is a significant amount of downward pressure and of course we have a massive amount of significance with the downtrend, so I certainly don’t feel comfortable buying.
The supply is far too strong for demand, and of course the winter storm that hit the eastern part of the United States is now over, so this point in time any reaction due to that storm has probably already run its course. I continue to sell rallies and breakdowns going forward.