Crude Oil Outlook

WTI has spent the last 6 mo.s overcoming repeated sell offs to gain new highs at 92.58 , retracing 52% of the 2008 plunge of  $114 . That  move up very likely completes the -C- of B, or the entire correction up from 32.40.
 click to enlarge
Using the actual spot month low of 32.40 as the pivot point; -C- = .62 of -A- at 92.58. It also was roughly equivalent in time; 7 mo.s vs. 6 mo.s. 
If the above count is correct and the B wave is complete, the outlook is for the C wave down to be underway. That will be a major decline that has some relationship in price and time to the A wave.
The A wave was a Fib. 78% PULLBACK from the 147 high. An equal move in PERCENT targets 20.37.
If the C wave = .62 of the A in nominal terms it targets 21.90.  And the C= 50% of the A at 35.58 roughly a double bottom. So 35 or 20.
The A wave down was very very abrupt taking only 5 mo.s vs the 24 months up of the B wave. My guess is the C wave takes something in between...splitting the difference wiill be 13 mo.s, also 2.6 x the 5 mo. A wave.
How will it look?
This market struggled to clear the April 87.15 high and it took over a month to gain $5 above that point. 
That was accompanied by record spec long O.I  climbing right into the highs. My gut is that a break below the 87 number will get the momentum going pretty dramatically.
click to enlarge

Note the .382 and 50% retrace points lining up horizontally with prior tops and bottoms. Taking out the 50% retrace will be the final call. Most likely the biggest downside gains will be early on given the O.I.
15 min.
 click to enlarge
The initial move down sure looks like a 5 count. There will almost  certainly be another leg down and very likely that will take out the 87 level.  If it is a "3" , and that is likely, it should be some Fib multiple of the first  $4.48 move down; and even an equivalent leg down from say 90, takes out that 87 level. There is a high risk of an acceleration to the downside from whatever point this mornings bounce reaches.


Popular posts from this blog

WTI Update- a 4 Handle Future?

Biden Climate Plan and Global GDP

Gasoline a By-product of Distillate