Thursday, February 25, 2010

WTI Big Picture and Outlook

The Big Picture;
click to sharpen
Wow, WTI is darn near the highs for the last 12 mo.s ...and at $84.00 it was a 161% rally from the 32.40 low. HHMMMM familiar number.
Whether you think we had a 5 wave count up or a triple series of ABC's ( as I do), it looks complete.
The bulls expect a pullback to some Fib level, and the .382 and 50% retraces will put WTI roughly into levels of previous support. That potential support will most likely only be temporary. All initial Elliott 5 wave count's are followed by at least one more leg in the same direction, either a C wave or 3. The 147 to 32.40 leg was a 5 down.
It is possible, if the move up is a 5, that the pullback just starting will turn out as "b" , which can retrace the entire move up or even make a down and under irregular low.   However, given the probable triple ABC structure, and amount of time spent going up, the odds  favor the leg we have begun down to be related to the $147 to $32.40 move. 
What might that leg down look like?
In the intermediate term, say 3 mo.s, the aforementioned fib support and the very impressive ability of WTI to attract spec buying, might keep it in the ranges seen over the last 8 mo.'s $65 to $80 and then $58 to $75, albeit working lower. Perhaps it shapes up as 1,2,-1-,-2-  forming the right shoulder of a head and shoulders pattern.
But take a look at the velocity of that first move down from 147 to 32.40. If this leg is related to that one it could accelerate rapidly as the fib retraces are taken out. Naturally a lot will depend on global equities, the Euro etc and how effective the gaming of that is.
 
click to sharpen
Longer term eventual targets of another leg or two down ... $27 as C=50% of A , $22.20 as a gross 85% pullback from $147, $18.18 as C=A in % terms , and $13.55 as C=.618 of A, in nominal terms. 
Those numbers also correspond to the range of the 4th wave of lesser degree ( super cycle)  traded within for 20 years.




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