Trade It: Crude Oil Breakout Alert, Natural Gas Tags Major Support, Rally Expected

Crude Oil & Natural Gas Market Analysis - Gareth Soloway (Verified Investing)

Key Concepts:

• Breakout: A price movement beyond a defined resistance level, often indicating a continuation of the trend.
• Retrace to the Scene of the Crime: A price pullback to a previously broken support or resistance level, offering a potential re-entry point.
• Pivot High/Low: Significant price points on a chart used to identify potential support and resistance levels.
• Trend Line: A line connecting a series of highs or lows on a chart, indicating the direction of a trend.
• USO & UNG: Exchange Traded Funds (ETFs) used to gain exposure to crude oil and natural gas respectively.
• Dollar-Cost Averaging: An investment strategy where a fixed amount of money is invested at regular intervals, regardless of price.
• Probability-Based Trading: A trading approach focused on identifying setups with a high likelihood of success, acknowledging that no trade is guaranteed.

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Crude Oil – Major Breakout & Potential Targets

Gareth Soloway identifies a significant breakout in crude oil, confirming a bullish setup previously discussed in prior videos. The breakout occurred when the price closed above a descending trend line that had acted as resistance multiple times. He emphasizes that this breakout wasn’t driven by fundamental news regarding Venezuelan oil production, despite initial market reactions suggesting a potential price decline. He argues that Venezuela’s infrastructure limitations prevent a rapid increase in oil supply, and the political situation remains unstable.

He notes that US oil companies are hesitant to invest heavily in Venezuela due to concerns about price suppression and political risk. Soloway highlights the importance of the chart pattern, specifically a bullish consolidation characterized by higher lows and lower highs, culminating in the breakout.

Targets & Trading Strategy:

• First Target: A major pivot high from 2024, 2025 (mid-year), representing a potential 25% move from the breakout level.
• Buy Level (Retrace): A retrace to the broken trend line ("scene of the crime") offers a viable entry point.
• ETF for Trading: USO (United States Oil Fund) is recommended for those without futures accounts.

Soloway anticipates oil to be the best performing asset in the first half of 2025, acknowledging uncertainty about the second half of the year. He points out that oil is trading at levels seen a decade ago, significantly below inflation-adjusted prices (currently in the $50s, while inflation suggests $80-$90).

Natural Gas – Oversold Condition & Bounce Potential

Soloway discusses natural gas, noting a significant decline and a test of a key support trend line established between February 2024 and August 2025. He accurately predicted the rejection at the previous high, identifying it as a high-probability area for a reversal. While he didn’t anticipate the magnitude of the fall, he’s now positioned for a long trade based on the chart.

Targets & Trading Strategy:

• Bounce Target: A zone between the gap fill and a pivot low, potentially yielding a 17-21% gain within a week or two.
• ETF for Trading: UNG (United States Natural Gas Fund) is recommended.
• Support Levels (If Breakdown Occurs): 273 is identified as the next support level. He suggests adding to the position at this level, rather than stopping out due to the oversold condition and bullish outlook for energy overall due to the oil breakout.
• Dollar-Cost Averaging: Recommended if the price breaks down further, allowing for accumulation at lower levels.

Soloway emphasizes a probability-based approach, acknowledging that no trade is guaranteed. He advocates for unloading portions of the position as it moves into profit to secure gains.

Logical Connections & Overall Perspective

The analysis demonstrates a clear connection between technical analysis and potential trading opportunities. Soloway consistently emphasizes the importance of chart patterns, support and resistance levels, and trend lines. He contrasts chart-based analysis with emotional market reactions, arguing that the charts accurately predicted the oil breakout despite initial bearish sentiment surrounding Venezuelan oil.

He highlights a potential rotation of capital into oil, as other asset classes (silver, gold, stocks, AI stocks) have already experienced significant gains. The simultaneous bullish setup in oil and potential bounce in natural gas suggest a broader bullish trend in the energy sector.

Notable Quotes:

• “The charts are in charge. And I always defer to the charts.” – Gareth Soloway, emphasizing the primacy of technical analysis.
• “I’ll go long anything and I’ll go short anything. I have no biases. I trade purely the charts.” – Gareth Soloway, highlighting his objective trading approach.

Data & Statistics:

• Oil Price: Currently trading in the $50s, while inflation-adjusted price should be $80-$90.
• Oil Breakout Target: Potential 25% gain from the breakout level.
• Natural Gas Bounce Target: Potential 17-21% gain from the current support level.
• Pivot Points: Specific pivot highs and lows from 2024 and 2025 are used to identify targets and support levels.

Conclusion:

Soloway presents a bullish outlook for both crude oil and natural gas, based on technical analysis. He identifies specific entry points, targets, and risk management strategies for both assets. He stresses the importance of a probability-based trading approach and remaining objective, deferring to chart patterns over emotional market reactions. The analysis provides actionable insights for traders looking to capitalize on potential opportunities in the energy sector.