CRUDE OIL BREAKOUT & NATURAL GAS BUY ZONE 🚨 $120 Oil Coming?

Crude Oil & Natural Gas Market Analysis - Gareth Soloway (VerifiedInvesting.com)

Key Concepts:

• Wedge Pattern: A chart pattern indicating price consolidation, ultimately leading to a breakout or breakdown.
• Trend Lines & Parallels: Lines connecting pivot points on a chart to identify potential resistance or support levels. Longer trend lines signify stronger potential moves upon breakage.
• Pivot Points: Significant highs or lows on a chart used to identify potential support and resistance.
• Gap Fills: Price movements that retrace to fill gaps in previous price action, often acting as support or resistance.
• Money Flow: The movement of capital into and out of an asset, often a primary driver of price trends.
• Resistance & Support: Price levels where an asset is likely to encounter selling (resistance) or buying (support) pressure.
• ETF (Exchange Traded Fund): A type of investment fund traded on stock exchanges, offering exposure to commodities like oil and natural gas (e.g., USO, UNNG).

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Crude Oil Analysis: Potential for Significant Upside

Gareth Soloway analyzes the crude oil market, highlighting a recent breakout from a classic wedge pattern. He emphasizes that a breakout from a wedge, particularly a longer-term one, often signals a substantial price move. Currently trading around $63 per barrel, oil faces initial resistance around $68. Breaking this level is crucial.

Technical Analysis & Key Levels:

• Current Situation: Crude oil has broken out of a wedge pattern and is currently rallying.
• Near-Term Resistance: $68 per barrel represents the next significant resistance level, offering approximately 10% upside potential.
• Long-Term Trend Line: A longer-term trend line, if breached, could trigger a “cataclysmic” rally, potentially reaching $120 per barrel – a 100% increase. This would have significant negative implications for the US and global economies.
• Support Levels: If oil were to decline, support is identified around $45 per barrel, based on a parallel trend line analysis.
• Parallel Lines: The use of parallel lines on the weekly chart reveals a potential trading range and identifies key support and resistance levels.

Historical Precedent & Catalysts:

Soloway draws parallels to the 2008 financial crisis, noting that oil prices increased in the early stages of the recession before ultimately collapsing. This suggests that oil can experience significant gains even amidst economic uncertainty, driven by money flow. Potential catalysts for a larger rally include geopolitical tensions involving Iran or Russia. He stresses that his analysis is chart-based, and while he hypothesizes about potential causes, the chart dictates his strategy.

Trading Strategy:

Soloway plans to reduce his long positions in oil around $68-$69 per barrel (where resistance is expected). Conversely, he would consider buying oil around $40-$45 per barrel if a significant recession-driven decline occurs. He emphasizes respecting resistance until it is broken.

Natural Gas Analysis: Accumulation Opportunity

The analysis shifts to natural gas, acknowledging a recent substantial decline. However, Soloway identifies potential support levels where accumulation (buying) could be considered.

Technical Analysis & Key Levels:

• Current Situation: Natural gas has experienced a significant pullback after a previous rally.
• Immediate Support: $3.00 per barrel represents a key support level, coinciding with a former gap fill and pivot low. Another gap fill exists just below this level.
• Longer-Term Support: A downsloping zone extending back to March 2025, around the $2.80 level, is identified as a significant support area. This zone previously acted as resistance before the breakout.
• Accumulation Zones: Soloway suggests a phased accumulation strategy:
  • $3.00 - $2.90: Begin to accumulate a small position.
  • $2.80: Add to the position.
  • Below $2.80: Reserve some capital to potentially capitalize on further downside, acknowledging the possibility of overshooting support levels.

Trading Strategy:

Soloway intends to begin accumulating natural gas in the coming days within the $3.00 - $2.90 range, with further additions around $2.80. He utilizes ETFs (UNNG) for commodity exposure.

Parallels to Silver & Market Psychology

Soloway draws a comparison between the current oil chart and historical silver price action. He notes a pattern of a large surge, followed by a retrace to the “scene of the crime” (previous resistance), and then a subsequent move higher. He suggests that silver could retrace to $50-$54 per ounce before resuming its upward trajectory. This highlights the importance of understanding market psychology and recognizing patterns of greed and fear.

Notable Quote:

“Resistance is respected until proven otherwise.” – Gareth Soloway, emphasizing the importance of respecting technical levels until they are decisively broken.

Conclusion:

Soloway presents a bullish outlook for both crude oil and natural gas, albeit with specific price targets and risk management strategies. He emphasizes the importance of technical analysis, identifying key support and resistance levels, and understanding historical precedents. He advocates for a disciplined approach to trading, utilizing ETFs for commodity exposure and respecting established technical levels. The analysis highlights the potential for significant gains in both markets, contingent on specific chart patterns unfolding as anticipated.