Wednesday, February 11, 2015

Crude Oil Update


 This rally began from a Fibonacci significant point, accompanied by huge volume in what can only be described as a powerful thrust up producing a 24% increase in price over 4 days. 

Have we seen the lows, or is this a sell the rally moment?
I think we've seen a major reversal for the above reasons . (Please see the previous post for the Fibonacci rational for this rally.) The fact that major players are looking for much lower prices is a reason to be bullish; presumably they and their clients are now short or at least not long. 

 Monthly continuation

The most likely wave count as labeled above has WTI at the lower side of the range, within a consolidation of the dramatic wave 1 down. The market is still digesting that 114 point move. Another major move up, the "C"is likely to complete a 2 wave correction back up.
The alternative wave count is that rather than labeling the 2009 low as a 1, it is instead an "A". In that case the recent low now labeled B would instead be the "C" of a multiyear consolidation from the $148 high made in 2008.
Both counts would imply much higher prices.

 Daily 
click to enlarge
Even a relatively modest (given the volatility) .382 retrace of the last leg down, represents a pretty good real $$ and percent increase at $68.76

More importantly there is significant risk of a retest of the highs of the long term range; 114 or even 148, given the two alternative wave counts described above. 
Downside risk is somewhat more limited in real $ terms to $30ish, the previous low of the range. 
It is possible to see even lower numbers but I believe that will only occur AFTER either global political action to constrain fossil fuel usage, or worldwide economic depression...neither of which is showing up yet.

Meanwhile the recent thrust up has been consolidated in a classic abc pattern with fibonacci relationships between the legs. At least on more leg up to go whatever the wave count.







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