After watching Crude Oil fall from the $65
ppb level to the $58 ppb level (-10.7%) over the past few weeks, we still
believe the energy sector is setting up for another great trade for skilled
investors/traders.
We are all keenly aware that Winter is still
here and that heating oil demands may continue to push certain energy prices
higher. Yet Winter is also a time when
people don’t travel as much and, overall, energy prices tend to weaken
throughout Winter.
Over the past 37 years, the historical monthly breakdown for Crude Oil is as follows:
December: Generally lower by -$0.33 to -$0.86. Averages to the downside: -3.65 to +3.08
January: Generally lower by -$4.57 to -$6.72. Averages to the downside: -2.68 to +2.27
February: Generally higher by +$8.41 to +13.73. Averages to the upside +3.07 to -2.54
March: Generally higher by +7.33 to +$15.62. Averages to the upside by +2.84 to -2.14
Over the past 25 years, the historical monthly breakdown for Natural Gas is as follows:
December: Generally lower by -$2.34 to -$5.26. Averages to the downside: -0.81 to +0.69
January: Generally lower by -$5.14 to -$7.97. Averages to the downside: -0.69 to +0.45
February: Generally lower by -$1.48 to -$3.62. Averages to the downside -0.50 to +0.49
March: Generally higher by +0.63 to +$1.88. Averages to the upside by +0.41 to -0.70
Over the past 35 years, the historical monthly breakdown for Heating Oil is as follows:
December: Generally lower by -$0.16 to -$0.37. Averages to the downside: -0.14 to +0.09
January: Generally lower by -$0.52 to -$0.96. Averages to the downside: -0.09 to +0.10
February: Generally higher by +$0.48 to +$1.06. Averages to the upside +0.11 to -0.08
March: Generally higher by +0.03 to +$0.11. Averages to the upside by +0.09 to -0.10
This data suggests an extended Winter in the
US may prompt further contraction in certain segments of the energy sector that
may prompt an exaggerated downside price move in Crude Oil and Natural
Gas. Heating Oil may rise a bit if the
cold weather continues well past March/April 2019.
Conversely, if an early spring sets up in
the US, then Crude Oil may begin to base a bit as people begin to traveling
more, but Heating Oil and Natural Gas may decline as cold weather demands
abate.
Heating Oil has almost mirrored Crude Oil in
price action recently. Our modeling
systems are suggesting that Crude Oil may attempt to move below $40 ppb. This move would be a result of a number of
factors – mostly slowing global demand and a shift to electric vehicles. We authored this research post early in
January 2020 – please review it.
January 8, 2020: IS THE ENERGY SECTOR SETTING UP ANOTHER GREAT ENTRY?
We believe any price level below $40 in ERY
is setting up for a very strong basing level going forward. We have identified two “pullback zones”. The first is what we call the “Deep Pullback
Zone”. The second is what we call the
“Deeper Pullback Zone”. Any upside price
move from below $40 to recent upside target levels (above $50) would represent
a 25%+ price rotation.
Historically, February is a very strong
month for ERY. The data going back over
the past 12 years suggests February produces substantially higher upside price
gains (+1899.30 to -394.28) – translating into a 4.8:1 upside price ratio over
12 years. Both January and March reflect
overall price weakness in ERY over the past 12 years. Thus, the real opportunity is the setup of
the “February price advance”.
We believe any opportunity to take advantage
of this historical technical price pattern is advantageous for skilled
traders/investors.
This is a pure technical pattern based on
price bar data mining. This is something
you may not have ever considered unless you had the tools to search for
historical price anomalies and rotation patterns. We have created a suite of tools and price
modeling systems we use to help our members find incredible opportunities –
this being one of them.
Get ready, February will likely prompt a very nice rally in ERY if historical price triggers confirm future price activity. The price pattern in February suggests a large upside price move is likely in ERY and we believe these low price basing patterns are an excellent opportunity for skilled traders.
Join my Wealth Building Newsletter if you like what you read here and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own.
Chris Vermeulen
www.TheTechnicalTraders.com
NOTICE: Our free research does not constitute a trade recommendation or solicitation for our readers to take any action regarding this research. It is provided for educational purposes only. Our research team produces these research articles to share information with our followers/readers in an effort to try to keep you well informed. Visit our web site to learn how to take advantage of our members-only research and trading signals.
