Crude Oil Intraday Update: Up, Down, And Sideways

It may not sound right to many people, but technically, charts can only move in one of three main directions. North, South, and East. When a trend has soared North, we have 2 directions remaining where oil can go next. When it goes sideways, it’s in the process of switching directions. Which trend line will oil hit first? The top one, or the bottom one?

The wave count I’m showing is short term bullish, if a diagonal bullish phase is in progress.  I try not to present many alternates on one chart, as I have to use many of the past wave positions as a reference, for a new wave count. I checked the Gold/Oil ratio and it has compressed  to just a bit below 22:1. This may be due to the fact that we are in the February 2018 contract month, which usually smooths out over time.  Now if this ratio suddenly moved to say, 20:1 or 17:1, then we may be due for a longer correction.

The bearish move can still happen, so the bottom trend line would get sliced in two, once oil charges below $55.  The $60 oil price  is a previous bear market resistance level, so it stands to reason that oil is giving the oil bulls a hard time. I mentioned it many times that bull markets end when their charts are pointing up, but this is not one of those times. The vertical move would be obvious on a weekly or monthly chart as well. Far more bullish media would have to be present, which are still missing today.

Some analysts are calling for a very bearish $40 oil market in 2018, but I don’t see it that way at all. Any bearish target is worthless information if oil does crash to $40 but then drives to $89-$115 or more.

The idea is to never waste a bull market in asset classes, but being late chasing a bull market is not what I mean. I like it better when the markets make a firm commitment in one direction, as after that we usually get a soaring reversal.

Any zigzag or flat that is pointing down in a bullish phase ending with a C5 wave, will get completely retraced over time. Since the crash from the 2008 peak looks like an “ABC” pattern, then eventually crude oil should rise above $147 highs.