Oil trending sideways for nearly two months

The daily chart of oil is shown below,with a huge spike occurring on Wednesday to $112/barrel, leaving ahuge shooting star, which is indicative that a top was put in placeof some Degree. Oil has been trending sideways for nearly two months now, so the breakout to the upside at a minimum met the requirement,although from a time perspective it should have lasted longer. The sharp rise in price created a huge price excursion above the 21 and 34 MA Bollinger bands, suggestive that a short-term top was put in place. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K marginally above the %D in 1 and beneath the %Din 2 and 3.

The weekly chart of oil is shown below,with the upper 21 MA Bollinger band above the 34 and 55 MA Bollingerbands, suggestive that an overbought condition is developing. Lower Bollinger bands are beneath the current price and have yet to curl upto indicate that a definitive top was put in place. Full stochastics1, 2 and 3 are shown below in order of descent, with the %K above the%D in all three instances. Until the %K in stochastic 1 falls beneaththe %D in 2, there is no indication from the weekly charts perspective that a top was put in place. There essentially is a triple top in the price of oil from 2011 until present, that will require a weekly close above $115/barrel to indicate a breakout to the upside. There is the potential for $30/barrel being added onto the price above $110/barrel, or $140-150/barrel, depending upon howthings develop in the Middle East. The reaction to the triple top wasseen on Wednesday but only managed an intra-day high....no daily orweekly close above $110/barrel. Expect further consolidation in the price of oil until it manages to break higher.

The monthly chart of oil is shown below, with the price clearly breaking above the wedge that formed from 2009 until present. It is important to note that the apex ofthis wedge terminates between mid November until year end, depending upon how it is drawn. Full stochastics 1, 2 and 3 are shown below inorder of descent, with the %K above the %D in 1 and 3 and beneath the%D in 2. Based upon the %K in stochastics 1 and 2 curling up, expectfurther upside price action to last until at least sometime between mid November into year end. The upside target ideally is $140/barrel, based upon the price swing and amount of time consumed in this sideways price action move lasting over 3.5 years thus far. For those dabbling in oil stocks, expect further gains to be made over the coming 3-4 months before any sort of a top is put in place.

Natural GasThe daily chart of natural gas is shown below, with lower Bollinger bands beneath the current price, suggestive that further sideways to upward price action is likely.Full stochastics 1, 2 and 3 are shown below in order of descent, withthe %K above the %D in all three instances. Extrapolation of the %Kin stochastics 1 and 2 suggest further sideways to upward price action is likely over the course of the next 2-3 weeks before any sort or a top is put in place. Natural gas prices moved above the 38.2% Fibonacci retracement level, suggestive that a back test of itis likely before moving higher...expect significant resistance between $3.70-3.90/unit.

The weekly chart of natural gas is shown below, with upper Bollinger bands all in close proximity to the current price, suggestive that further sideways to downward price action is likely over the mid-term. Although the daily chart suggests strength lasting for another 2-3 weeks, the mid-term trend suggests abounce is underway before a resumption to the downside occurs. Full stochastics 1, 2 and 3 are shown below in order of descent, with the%K beneath the %D in all three instances. Extrapolation of the %K in stochastics 2 and 3 suggest that a bottom is not likely to be put inplace for at least another 3-4 months.

The monthly chart of natural gas is shown below, with lower Bollinger bands in close proximity to each other. It is interesting to note that a hammer doji appears to be putin place for August, while the weekly chart clearly suggests further sideways price action over the next 3-4 months. Full stochastics 1, 2and 3 are shown below in order of descent, with the %K above the %Din all three instances. Extrapolation of the %K trend in stochastics1 and 2 suggest further sideways to upward price action over the next4-6 months.

I will update the XOI later on tonight...with the price of oil spiking higher and then declining, it will be important to see how the XOI reacts in order to generate amore accurate forecast...the price should be online later on tonightaround 11 PM Central time.

 Have a great day.