Tag Archives: WTI

Crude Oil: Break Out, Or Bear Attack?

Once I had a look at the intraday chart I had to bump it up to 3500 bars from my normal 500.  This allows us to go back further, but still keep Intraday settings.  At the $65.36 price level crude oil could be hitting a brick wall, at least in the shorter term. We have a double top and a big obvious Head. In true bull markets, these types of H&S setups can be very bullish,  But if we are ending a bullish phase, then this H&S pattern can be an ominous warning.

It sure looks like a bullish zigzag but I do have choices depending what oil will do next, if it crashes with another zigzag, then a triangle will work, but if any decline looks more like a 5 wave sequence, then an expanded flat could be completed.

We could roll around the $56 price level for a little while, before oil turns and soars again. I think if another zigzag develops heading down, then we should get a big “b” wave counter rally.  I will give crude oil until the $55 price range, but after that the wave counts could get trashed rather quickly.

Crude Oil 2009-2018 Weekly Chart Review

What the majority that called that crude oil was in a bull market didn’t pan out that well. The crash into the 2016 bottom made sure of that. Even now, many call this a bull market, but they are also waiting for a correction. With crude oil we have monthly contracts, but I always look ahead to see where the next busiest month is.

Without a shadow of doubt,  the June 2018 and December 2018 contracts are the two busiest months. This means when the June contract expires I will be going directly into the December 2018 contract month. There was a 25 cent difference between the April and June contracts which is nothing in the bigger scope of things which produced  little change in the Gold/Oil ratio. I will talk more about the Gold/Oil ratio at the bottom of this page.

The fact that I’m showing a Primary degree “B” wave top must make the July, 2008 peak a Cycle degree peak. At the early 2009 bottom, we have a bear market about 7-8  year’s long, plus another two years in our present rally. It would be something if crude oil ended up with a bear market lasting 13 years!  I don’t think we can get that lucky because the big question is if our present rally is a fake.

This could still take a few more years and we need something more solid to go on. During the 3 year, topping process oil created a classic wedge which gave us a clue that a down draft in the price of oil was coming. Flip this wedge in reverse and you would get an explosive rally, like what happened with the VIX.

 Analyzing Chart Patterns: The Wedge

The H&S pattern didn’t disappear or is no longer important, even with a higher right shoulder. The January 2018 peak finished at $65.52, but there is no guarantee it will hold in the short term.

Crude oil crashed along with stocks in 2008, but also recovered with the stock market in early 2009. What has happened once can happen again, so I sure don’t want to rule anything out.

Any 4th wave bullish phase should technically get completely retraced, which would be lower than $28 on a weekly crude oil chart.

America has become a giant oil exporting nation so they can pump as much as other countries are willing to buy. The supply may not be an issue, but demand could dry up and blow away. This is speculation based on a possible 4th wave scenario in Intermediate degree.

Why U.S. Oil Exports Are Surging | OilPrice.com

March, 7, 2018 Crude Oil Intraday Crash Update

I have made a few changes with the oil wave positions. I added the 4th wave in Intermediate degree at the January top.  This is not chiseled in stone, but I have to use it to eliminate it.  This next set of 5 waves must crash below $58 as that alone will help to confirm that this wave 2 rally in Minute degree was just a bearish trend counter rally.  Usually with any zigzag crash the “A” wave can be very steep, with the “C5” wave meandering more obviously.

This is not what is happening so the wave two rally has a good chance of holding.   Just by adding one higher degree of the 4th wave in Intermediate degree makes the 2008 peak a Cycle degree top.  The major rally from the 2008 $34 bottom to about the 2011 top ($115)  was confirmed as a bear market rally, when oil crash to about $28 in late 2015.  If oil keeps progressing south, then by the end of 2018 we would be finishing a 10 year bear market. A 13 year bear market would get us very close to the 2021 time period, just in time for solar cycle #25 to take off.

I have mentioned it several times that oil could fall to $12 if the rally that started in early 2016 was a fake. It sure was frustrating enough to count out. Some fundamentals are very positive, but they are still years away from kicking in. Oil fields get pumped out which slows worldwide oil production.   I look up or down with the wave counts, but 2-3 years is still a long time where anything can happen.

Many presidents in the past have added duties on countries and it all sound like a trade war as well.  Most of it is just jawboning rhetoric and it will never happen, so don’t get too wrapped up in the “Tariff Wars” that the mainstream media loves.

The commercial traders are net short WTI oil by a ratio of 2:1 while the speculators are still net long by a ratio of 6.9:1. This is a huge bull trap that the speculators are in. These numbers should eventually reverse and when that happens, then another set up for an oil bull market should happen.  The Gold/Oil ratio has not really changed that much and is still sitting at a bit over 21:1, which seems to be a double and even triple top. This ratio should expand when oil gets cheaper,  and then compress when it becomes more expensive.

Crude Oil Rally Is There More To Come?

This crude oil rally has gone higher than what I would like to see. I’am pushing my luck if I keep calling this a 4th wave rally, but when dealing with diagonals we can have some stunning moves and then make equally stunning reversals.  I can’t fit this rally into a clean impulse at all, so I have to look at it from a diagonal wave perspective.

These ugly bullish moves can be fake moves, and we have to wait until this run breaks to new record highs, or crude oil heads south below $58! I read reports about Asian oil field production levels are on the decline in the next few years, as big oil fields start to lose their production capacity.

Combine declining oil field production and lack of finding new oil fields sure could put a crimp on future oil supplies.  The real reason that oil is going up could be because of winter demand, and the coldest time of the year!

US map reveals the coldest days of the year across the United States | Daily Mail Online

Crude Oil Bull Market Update

Recently, analysts have been painting us a very bullish picture, as  “$ 100” oil is coming.  Just like in true style the $70 per barrel has been changed to a $100 price forecast.  It’s just amazing how analysts once were calling for $10 oil, now suddenly see “$100” oil in our future. If these forecasts are believable, so why can’t they tell us  what price level oil can crash too, once or if  crude oil hits $100 per barrel.

We’ve had a long skinny bull market, which can’t continue forever. If only a short correction is coming, then the $55 price level could get hit, but if a bigger correction is due crude oil could fall towards the $45 price range.  In 2008 Oil crashed with stocks before, so there is no reason why it can’t do again.

The Gold/Oil ratio is just a bit above 20:1 but in 2014 oil crashed from a 17:1 ratio. Sudden compression moves in the Gold/Oil ratio usually produced a decline in oil prices, but I have not noticed that happen at this time.

Crude Oil Impending Bearish Phase.

I mentioned that I was very bearish towards crude oil, and that oil could slump into a bearish phase, already expected by many others experts. Even though oil has travelled north I will remain bearish until I can see some type of a sincere corrective wave playing out.  Even if it is a shorter price bearish phase, any market can come back to the previous 4th wave of one lesser degree. This would mean oil could see the price range between my “D” and “E” waves.  This is only a strong guideline, not a strict rule, as markets go under previous 4th waves all the time.

This time the Gold/Oil ratio was sitting at just under 21:1, this is not an extreme ratio, but it sure would work as an interim short term ratio peak. Just before the oil crash in 2014-2015 this ratio started with a 17:1 ratio. Ultimately the Gold/Oil ratio crashed to 44:1. The decline can be fast or slow, so anything can still happen in the short term. They have forecasted this $70 price level for sometime already but so far it has been an elusive target. Many report great crude oil fundamentals, but then again “every” major top will get you amazing fundamentals.

A potential price crash forecast changes all the fundamentals once the prices hit a major bottom. At the 2008 peak experts were convinced that the world is running out of oil, and had warned us that $200-$300 oil price would happen. Yet the oil price crashed to $34 and next thing you know the world was in another oil glut by late 2008. Fundamentals will always tell us the wrong things at the extremes, but the Gold/Oil ratio could still crash to 25-30:1.

Even the gold pattern is looking much like oil, so gold stocks could take a correction hit as well.

Crude Oil Intraday Record High Running Out Of Gas?

Crude Oil seems to be running out of gas and has started another move that could fall much lower or deeper than what the majority think will happen. When I think it is important, I will post multiple wave counts.Since I dropped the degree level down by one degree, but used the bottom of Minscule degree.  I will no longer post any wave count that is smaller than the official list of 15 degrees. By using only 15 degree levels, it helps to better gauge the end of a run across most intraday charts.

Simply put, “once we run out of degree levels, the bigger trend is also coming to an end. The size of the 4th waves get smaller and smaller, as we get near the end of a run. I have gone back to using the fixed degree list for some time already, which most readers will never notice the change.

Yes, I may still be a bit early, but we have to be a bit early so more readers can adjust their thinking.  If we go back to the daily chart, we can see a major bottom on June, 22, 2017 of $44. This would be a very bearish downside price target, which is hard to imagine, but I would consider a decline like that as pretty normal.

We are dealing with wildly leveraged commodities contracts, that have a very bad reputation for making crazy moves that are very hard to catch before they happen.

It will remain to be seen if we have more upside left, but I sure like the idea of a triangle in a 4th wave which was followed by a “thrust” to the upside. The triangle forces a degree change as well, and most of the time it can be a difference of two or more degree levels.

At $60,  oil has run into resistance and struggled as it touched $64 so far. There is also a huge H&S pattern with the daily charts, and we know these patterns can also produce violent reactions.

The Oil volatility index OVX also had a bottom at $22.98 and has now started to climb again in recent days. Technically speaking the OVX will rise much more if this bearish oil correction starts to take shape.

Crude OIl Daily Chart Vertical Move Update!

Oil has now exceeded that $60 price level, but oil has done so with a wild surge to the upside. This last wave I have is starting to look like a single long 5th wave after what was a potential triangle 4th wave. I can’t remain bullish on oil until oil has made a significant correction. Traders are chasing anything that goes up so oil makes for a perfect target. Even a normal correction could retrace this entire 5th wave in a hurry, as commodities just love to create fast unexpected corrections.  Remember, when any bullish phase moves higher, sell stops start to pile up below present prices. When they get triggered things can move pretty fast.

The Gold/Oil ratio is still decent, but it has compressed a bit more everyday. In 2014 the Gold/Ratio shifted to 17:1 just before it started to crash, so maybe 20.66:1 will do the same thing. If I’m correct, then the Gold/Oil ratio should start expanding again.

In this case oil can fall back down to our  previous 4th wave of one lesser degree, which would be close to the $40-$50 price range. That would mean about a $20 price drop from todays levels. Oil crashed along with the stock markets in 2008, so oil crashing with stocks this time, would not be that much of a stretch.

Sure, we could get more upside, but the combination of a triangle in the 4th wave, followed by a “thrust” sure has ominous meanings.

Crude Oil Daily Chart Bull Market Update

If there is any doubt from the public perspective, if oil is in a bull market or not, then this rally to $63 should help to dispell that. Of course the herd took about 2 years before they figured it out. The $60 price level produced some resistance, but now seems to have barely worked past it.  Oil should still correct, but it can do this very suddenly, and freak out all the oil bulls again. This last surge to the upside is the result of the previous correction, but diagonal wave structures can create havoc in forecasting any future price targets.

We need another price target as the $60 price has been achieved. Oil also wobbled around the $55 price level and the next even Fibonacci number would be $89  oil. Just in case that is not enough, we can use $115 and then $147. That would force a degree change in my present wave counts, but that is to be expected with such an ugly oil bull market start.

The Gold/Oil ratio is compressing a bit all the time, but nothing to get really excited about at this time. The Gold/Oil ratio crossed below the 21:1 ratio, but that is still a far cry from the 9:1 ratio we had at the top of 2008. If the ratio changes dramatically, in a short period of time, then a bigger bull market correction could happen.

The previous 4th wave dip is between $58 and $56 USD, which could turn all the bulls bearish again, when that illusive $60 price level doesn’t hold.

I know I give price projections, but the price is just for public consumption as the whole world works on price. The pattern is far more important than any price forecast as when we can identify any 3 wave decline, we know that the market will retrace the entire move from where this specific  “A” wave in question, started from.  Everything is relevant to the largest degree, we think we are working in.

Crude Oil Intraday $60 Resistance Update.

At this time I’m still able to keep my wave degrees alive, but I know it will need adjusting again in the future. Gasoline displayed any “E” wave as a new low, but crude oil did not. We certainly got the “thrust” that usually follows any triangle. It will also force another degree change, if I like it or not.  For now, another correction seems to be in progress, which may not be finished just yet. We could get a sharp downward move yet, but spikes to the downside are bullish moves in a bull market.

With all the wild moves in gold and oil you would figure that the Gold/Oil ratio would dramatically change but in reality, it changed very little. The ratio today is 21.71:1 which has been floating between 21-22:1. Some analysts have made wild crude oil price forecasts already, but all the crazy future price forecasts you will read about, mean nothing if the Gold/Oil ratio suddenly shifts to below 10:1. This could happen at $89 or the $115 price level.

All the oil bears have been repeatedly demolished as the bull horns do their job. When the markets go up after repeated bearish calls, then this is a clear indicator that oil is still in a bull market.  When that situation starts to reverse, then any oil bullish phase will start to come to an end.

The big oil crash from the mid 2008 peak to the early 2016 bottom, sure can fit as a zigzag, which means that eventually crude oil will retrace its entire 7 1/2 year bear market.

Crude oil stopped just a bit under that $60 price level, which has been a resistance price target for some time. Eventually crude oil will break free again, and soar towards that $89 price target.

Crude Oil Intraday Rally Update

Crude oil did not decline any further, but actually stop right at the Fibonacci $55 price level and has now proceeded north again. Back in late August 2017, crude oil stopped at the $47 price level, which is also a Fibonacci ratio, (34×1.382). There is so much turmoil in the world crude oil market, which can screw up any fundamental reason for oil to rise.  One minute they call for a return of the crude oil bear market, and next they call for $60 oil.  I would rather see oil above $89 some time in the future, but the Gold/Oil ratio would have to help confirm it. 

Today the Gold/Oil ratio dropped below 23:1 which only happened a few times in early 2017.   Oil is getting a bit more expensive when compared to gold, but still well below any long term overbought condition. If the speed of the ratio compression picks up, then we may be getting closer to a much bigger correction. The last thing I want to do is call an end to this bull market, before it’s ready to do so. Oil may still have to make a much bigger vertical move, before any end is near, 

Crude Oil Intraday Crash Update

In the last few days crude oil has finally started to correct as oil plunges this morning. So far we have a spike to the downside, but that can just be the start of a diagonal decline. Oil may have to get close to the bottom trend line before it is ready to crank up again. I’m sure the bearish news will come out again, depending on how long this correction might take.

Without a doubt this oil market is about as choppy as it can get, which indicates a diagonal bull market is in progress. Oil may not reach the bottom trend line, but if a good correction plays out, then crude oil will resume its march northeast again.

The Gold/Oil ratio is about 23:1 which is not near any extreme ratio, so in the longer term there should be more upside to come. 

Crude Oil, Powering Higher, With Gold/Oil Ratio Commentary

Crude oil has powered higher, and now contains a vertical move. Short term, there may be more to go, but if the zigzag bullish phase is close, then we could see a correction sooner than we think.   Crude oil is still far away from crossing that $58 price level of this December contract, so I won’t be a happy camper until it does so.

One thing that did happen this morning the Gold/Oil ratio shifted to the expensive side at 23.57:1. This is about the second most expensive time since the start of 2017 and it would have to beat 22:1 if it wants to make a new record ratio high.  This is nothing to get all worked up about as the Gold/Oil ratio would have to compress much more. Any correction may bring it to the 24:1 range again, which seems to be normal at this time.

Crude Oil Intraday Bull Market Review

As choppy as these chart patterns show, it looks like the bullish phase still wants to move higher. Another zigzag looks like it has formed, so crude oil should break out to a new higher high.  Since the late 2015 bottom (daily chart), oil has been on one wild ride where most critical waves have overlapped. All these overlapping waves surely points to a potential zig zag bull market that should still take crude oil well above the $58 on the daily charts.

Since the June 2017 bottom crude oil is far more choppy that many other wave structures, so after oil breaks to a new high, it could implode again with a complete retracement of this June 2017 low of about $43. That would be the worst scenario in the short term.

The Gold/oil ratio has not really changed that much and is still sitting around the 24.32:1 ratio. I want this ratio to change in a big way by compressing this ratio towards the 20:1 ratio.  This will still take a long time before this happens and taking 2-3 calculations every few weeks, should give us an early warning, when oil starts getting expensive in real money terms. Gold is the real money, as all so called paper money is just an illusion. Paper money is just an electronic entry with only about 4% being real cash money that we can see and touch.

The crude oil chart started in 1860 and I’m working it is a big 5th wave extension for now. The 2008 top can work as a Cycle degree wave 3 position, but with a potential triangle still to play out.

Short term oil has to work through some price hurdles, that all need to get retraced until we see the last peaks in the rear view mirrors.

Crude Oil Intraday Review

For the last few months, the oil rally has been about as choppy as anyone can have. This makes trend picking much more difficult as any downside move can seem like the onslaught of an oil bear market. Yes, some have been calling for a bear market heading back down to $10.

Half A Million Bpd At Risk From Geopolitical Firestorm | OilPrice.com

There is the potential for a civil war to break out in Kurdistan, which has landlocked oil fields which must be pumped out through Turkey. Any stoppage of oil flow from this area could severely restrict the buildup of oil inventories.  

Oh the horror of it all, if they start yapping about an impending world oil shortage!  Some even say that the era of gasoline cars is disappearing fast, but the world runs on about 80% fossil fuels just to generate electricity.  The electric grid can be very unstable due to solar storms, so as we use more and more electricity, solar flares can and do have a huge impact on the earth. 

The worst would be that oil crashes much lower from the highs of today, or if oil keeps struggling  just trying to break out to higher highs. 

Crude Oil Intraday Update

Crude Oil did dip a little lower than the $49.80 I had shown. There was about a 30 cent difference before oil blasted up again. Due to the choppy nature of these oil charts, it is next to impossible to sequence a good looking impulse set of wave together, except on a very small degree basis.  The present oil rally could also be a fake, but with a deep correction crude oil could charge up again, and break another bullish record high. 

The $53 price level seems to be the short term peak to retrace, but the $58 price level must eventually be retraced to help confirm that the entire 2017 bear market has been or still is just a correction. 

Even if we are in a big “D” wave bull market, the majority can’t tell the difference between a big bear market rally and a bull market. They both go up and participants jump onto both types. They only care about one thing and that is that it keeps going up. 

Bear riders did the same thing on the way down, which just about always produces a bear trap sooner or later.  The Gold/Oil ratio helps in keeping an objective perspective on how expensive oil is when we use gold as money.

In late 2015 this Gold/Oil ratio touched an insane 44:1 ratio, which is the widest ratio I have ever recorded. Today we are sitting at a bit over 25:1 which has been the low average this year. Tracking the Gold/oil ratio several times a week gives us a heads up when oil becomes expensive when compared to gold. If the ratio jumps to 20:1 or lower, then we have to pay attention.  Crude oil could one day sit at $89 with  the world experts calling for $100 oil, but if the Gold/Oil ratio is sitting at 15:1 or less, then be prepared for the price of oil to crash one more time.

Of course, another real world oil glut would also show up again. Until that happens the oil bull market is alive and well, no matter how choppy and wild the bull market still becomes. 

This makes wave counting oil a real challenge, due to the leverage which is part of the commodities landscape. I would love to see this rally hold and push higher, but only time can answer that question. 

Crude Oil Intraday Peak Review

Crude oil has been cranking up in price, but the pattern gives us nothing but choppy waves. There still could be one more shot to the upside, but eventually we should get at least a correction, to throw off the bull wagon riders. There are a few near vertical moves that defy logic, but we also know that markets don’t work on logic. Markets run on emotions, and anything related to commodities usually runs on “fear”. Fear and extreme leverage produce all these wild spikes. 

I thought I would add a picture of what I can see any time during any hurricane season, which all should become less frequent until the end of hurricane season in November.  Even though massive amounts of warnings were given the majority were surprised when the hurricanes shredded the Caribbean islands. 

The Gold/Oil ratio, compressed a bit more making oil a bit more expensive gold. The last time we had a 24.83:1 ratio was way back in April 2017. Still, this is not near any extreme just yet. I record ratios several times a week, and we would have a concern if this ratio suddenly shifts and compresses much more. 

Crude Oil Rocket Ride Review

The correct I thought would happen was trashed as crude oil soared to another higher high. Crude oil also created a vertical spike which is usually followed by a correction in a bull market. When the big bullish phase comes to an end, then we could also see a vertical move, but then it sure will not be a correction.

That time is not now even if we have a dramatic decline in oil prices. Oil may wobble around for some time but should then start to crank up again. 

With this spike the Gold/Oil ratio became more expensive, but not by much. At 26:1 crude oil has lots of room to move up, but if we see a sudden shift towards the 20:1 ratio then we have to start taking notice. Until that day comes, this oil bull market is still alive. If we measure once or twice a week we should start catching any extreme long before the majority get suspicious. 

If we don’t calculate the Gold/Oil on a regular basis, then we will surely not see another oil crash coming. Besides the Gold/Oil ratio,  Steven Jon Kaplan will also see the top coming. He will post it or send that information to his subscribers, like he did in 2008. I have his RRS feed on the sidebar, but we have to see if it works the next time he posts.  

I do not use any internal indicators as those are the indicators for the majority, besides all those indicators in the trading tool box, are from an ancient era of the 1970’s when electronic trading started. 

Crude Oil Intraday Correction Review

Since early August crude oil has been on what looks like a correction. Where we are in this correction is another matter. The correction could have finished in late August, but that remains to be seen. Even now oil remains choppy with no real direction in mind.   Worst case scenario is that oil is in a triangle, but them we surely cannot be in a wave 2 positions. $58 is the big price top to beat, which would confirm that the entire bearish phase since mid 2016 was just a correction. 

Only one hurricane shows up at the Hurricane center web site, with Jose being far away from landfall and only rated as a category 1 at this time.  Another hurricane may form, but that can  still be 48 hours or more before we can see anything.  Hurricane Harvey wrecked havoc where 20% of oil refining is shut down. In the long run it will all work out, but these hurricanes are just part of the turmoil that is facing oil production and refining around the world.

September the 10th is the midway point of hurricane season lasting until November 30th. It seems that the types of storms also change in the second half of hurricane season.

The Gold/Oil ratio is just a bit below 27:1 which is still relatively cheap when comparing it to gold. This ratio has been drifting between 25 and 28:1 and until this ratio shifts dramatically towards 17:1 or lower, then the oil bull market is still alive. Oil could go to $89, and  if this ratio turns into a 17:1 reading or lower,  then we know to look for the end of the oil bull market. 

Crude Oil Intraday Crash Update

At this time crude oil did travel a few dollars higher than expected, but has now started to correct. Back in August we had a single zigzag,  but this was the opening move to a flat, an expanded flat at that. If this is all close, then we should see a much deeper decline coming in the next few weeks. After all holiday driving season is coming to an end and oil could be flowing again with plenty of inventory from reserves.

Even if crude oil declines to a new low, it can convert from an “E” wave decline to a regular zigzag wave 2 type of a decline. We will not really know until the “B” wave bottom is completely retraced. Even the initial move down was pretty steep, which gives us a clue that a correction is going to take place.

Even with all the wild moves in gold and oil, the Gold/Oil ratio got a bit cheaper and touched 27.47:1. This is far from being expensive when we use gold as money,  and eventually oil will start to crank up again. If the ratio changed suddenly to say 20:1, or lower,  then we may see some real bearish action again. For now we are still far away from that scenario.

Gasoline and crude oil can go their separate ways for long periods of time, as gas has to go through the refining process first. About 20% of the refineries were shut down due to hurricane Harvey,  so that still leaves lots of refineries that can get back to full operations pretty quick once conditions allow.

So was the early September rally all “Harvey”driven?  Before too long we will never know exactly which wave it was, because people simply forget. Back in early 2002 a major hurricane hit land when oil was at a wave 1 in Primary degree. I remember the wave count, but I would have to look up the hurricane which hit the oil rigs at that time.

September, 2, 2017 Crude Oil Daily Chart Review

There is lots of turmoil surrounding crude oil and potential gasoline shortages these days during hurricane season. Gasoline has charged up, but crude oil has remained well below gasoline futures.  I looked over the weekly chart and labeled  the 2008 peak as a Cycle degree wave 3. Don’t count on that as being glued to its position, just yet as we have to wait until this entire anticipated bullish phase is a done deal. Crude oil shot up in the last days of August, and if this zigzag that I’m working is true, then we should still move a bit over $48. At $50 I will start to scream “Uncle” as at the $51 price level, this wave count will get trashed.

Another 5 wave decline would have to follow with $43-$42 being the best target price. From the early 2016 low crude oil moved in such a choppy fashion that many of the wave positions I used, did not last long. I think there is a huge expanded “B” wave, with a diagonal decline. They are not impulse waves as every single rally wave, overlapped at critical positions. Expanded patterns in “B” waves or 4th waves can make dramatic reversals and push oil to new record highs.  Any “c” wave decline can drop like a rock in a very fast move down, like a mini flash crash. Those flash crashes or algorithms wrecking havoc, can produce those long down spikes that we can see. 

We are heading into the fall, but hopefully we will see this bottom by the end of this month. I feel pretty confident that the bigger bullish phase is nowhere near a done deal as the Gold/Oil ratio is still lethargic at this time. At 27.28:1 crude oil got a bit cheaper when compared to gold, which is a good thing. 

At the 2008 peak this ratio was about 9:1, and with the 2016 low it registered 44:1. This was a massive shift by any stretch of the imagination. In 2014 this ratio was about 17:1 before crude oil start to crash again. I think we could end up going well below 17-20:1 again. If this Gold/Oil ratio becomes compressed to the point that at $89 it becomes silly again, then oil will be setting up for another crash. The mainstream media could be hyping $100-$200 oil again by that time, but we know that markets will head the exact opposite way, when those days arrive. 

WTI Intraday Bearish Mood Review

Oil has now fallen further than what I would like to see. I have been staring at the blank crude oil daily chart to see if there is a better fit. All my wave counts that I had in Minor degree, are now bumped up one degree.   I have tried this before so basically I’m using a wave count from inventory with a few updated adjustments.   It was that secondary top, that I now have to call it a truncated (shortened)  5th wave of a diagonal. That short top is a potential 4th wave top in Minute degree which leaves us with a potential decline to new bear market lows. 

I do have a set of nice 5 waves going down, followed by a violent rally that sure could work as a zigzag ending at an “A” wave in Subminuette degree. Down from that “A” wave, we now are faced with another low. At this time the chances are good that an expanded zigzag has formed, from which oil could blast upwards traveling well above the “A”wave peak. Since this looks like a 3-3-5 we could end up at a “B” wave top  followed by another set of 5 waves down. 

It may all be wishful thinking, but moves like this happen many times. At $43-$41 oil would come up to serious support again as it completes another zigzag.  It sounds like an ugly picture, but it should be shorter term only. Obviously, Hurricane Harvey had a huge impact with many of the refineries shut down and unable to open. We see the huge spike in gasoline futures as those inventories plunge. Have no fear, Europe is all geared up to send refined products to the USA. Mexico gets its gasoline from the USA, so they will feel the pinch as well. The US is not only an importer of oil, but it sells a lot back to other countries that need the light sweet crude to mix with other heavy crude oils.  There is a lot of turmoil in the world as oil production has dropped due to fires, bombs, hurricanes and just plain bad management. All this could suck down inventories very low, and one day the herd wakes up to this,  and suddenly we have a shortage. 

The Gold/Oil ratio became a bit more expensive this time at about 26:1. It’s still well within the average range of being cheap. If and when we consistently start to push closer to 17:1 or so, then we may have to take another hard look at how our wave count is looking, at that time. 

Oil may hold at $46.60 in the short term, but the entire wave count could fail and continue heading south.  Any anticipated rally should happen sooner than later, as there is not that much room left to wiggling around. 

Crude Oil Intraday Crash Review

Crude oil has been very uncooperative as it refuses to act out the script I had started.  Any good impulse I had, died as soon as the critical waves started to overlap. If crude oil does stop short of going to a new low, then another diagonal set of waves could happen. The worst case scenario would be that the late July peak is a potential “D” wave in an unfinished triangle in Minor degree.  If the worst case is still to play out, then $42 or $43 could still be the  price target that would have to get hit. 

Right now crude oil is getting cheaper as the Gold/oil ratio is sitting at 27:1 This is still rather cheap and the spread may still widen a bit, if oil keeps crashing. There are only 3 directions that charts can travel,  either the bear market still needs to finish,  or there is a bullish phase still to come.  Any big bullish phase can be a false bull market, but the difference is the degree level of any big bearish rally. 

The $47.50 is one price level where any short term bullish scenario can still work. Today’s decline was rather sharp and steep, which is a bullish sign. 

There is just too much turmoil in the oil market these days,  to take any fundamental inventory numbers seriously. I have mentioned it before, but if you hear fundamental news being spouted more than three times, then this news is already irrelevant. 

It gets worse if our friends or family members are parroting the same news. You may laugh, but we are in an electronic delivery world, where news travels fast. How fast? As fast as it takes the wave to travel around a hockey arena, or as fast as you can count out 20 even Fibonacci numbers from a list.  😉 

Crude Oil Intraday Bearish Decline Review

What started as a potential 4th wave correction, oil has now started to break all the rules as the price has already dipped into both wave 1 tops. When that happens the markets must force the wave analyst to review everything and come up with a better alternate.  

I’m painting an alternate bearish picture, with a potential diagonal 5th wave still to complete. Since the June bottom we can count out a single zigzag bullish phase, or an inverted zigzag. (Bear Rally) Any move like this I always look for a 100% retracement. 

As easy as it is to draw out another falling zigzag, we could be on a diagonal wave 2 decline just as well. In other words a new bearish record low would never happen. Crude oil could still drop to the $46 price level, as oil would still need to finish wave 3-4 and 5 in Subminuette degree. 

I moved my big degree level up by one degree at this time, which would make any bigger bullish phase a Primary degree “D” wave. I will keep any $89 forecast alive as well, but we will have to keep one eye on the Gold/Oil ratio when the next bullish phase peak arrives. 

I have been averaging a Gold/Oil ratio calculation about once a week, which is enough of a sampling rate for now. At the early 2016 bottom the Gold/Oil ratio spread dramatically, which turned into a 44:1 ratio, the most extreme ratio I have ever calculated. The higher the number the cheaper crude oil is when we use gold as money. Today we are sitting at about 26.62:1 which is nowhere near being expensive. In 2014 just before oil started its big swan dive, this ratio was only 17:1 

I believe there still is a bigger bullish phase to come in the next year or so. When the majority becomes bullish on the oil price again for any reason, then it will be important to see how fast the Gold/Oil ratio has compressed. If the oil price soared to $89 and the Gold/Oil ratio compresses to 17:1 or even 10:1, then the oil party could be coming to an end. 

It doesn’t matter what the consensus of any oil price forecast, will be at that time, I’m sure the oil price will then turn and head south. In the short term I may have to resort to cosmetic wave counting more often as the 2008 oil peak is not as certain as I would like to have.

A big Cycle degree 4th wave triangle could be in progress so until we can completely rule it out, I have to keep the triangle idea alive and kicking. 

Crude Oil Intraday Plunge Review

I’m going to be brave counting these moves as a potential impulse sequence, with a 1-2, 1-2, and 1-2 count. We may have hit another bottom this morning, but we also have to look for a longer and far more complex flat or zigzag to still play out. There are no trend lines that I can draw,  that offer any special insight at this time. I’m not a big fan of trend lines, just because they have been so abused with Technical Analysis (TA). Besides, it is pretty obvious that the trend is still heading up.  Any kid with a ruler can see that a trend is in place, but what is harder to tell is when the bigger bullish move is finished.

Even then chances are good,  that the larger trend line will not work if a “D” wave is still in progress.  As I post crude oil is still making its way north, which is a good thing. 

The Gold/Oil ratio has changed very little and is sitting at 25.76:1 this morning. Eventually we want this ratio to compress as crude oil starts to get expensive when compared to gold. 9:1 would be extreme, but the Gold/Oil ratio may never get to that point, as it may only take 17:1 or less to trigger a super crude oil bear market again.

The $58 price level with this December contract,  is the price level to beat. That would help to confirm that the entire bearish phase since mid 2016 was just a correction. I think we will see $89 oil long before we will ever see $21 oil.   Crude oil has a nasty habit of following the even Fibonacci numbers, which makes it easier to look for turning points.

Crude Oil Intraday Bullish Phase Review

So far crude oil seems to want to keep playing the impulse type of game. I’m working this as a potential 1-2, 1-2 and another 1-2 wave count. This would be part of an extended wave 3 as crude oil has now pushed to the $50 price level. Crude oil should be ready for another correction, where oil could fall to the $48.20 price level, before it cranks up again. It may take all of next week before we know more, but a dramatic move much deeper than expected, would force another wave count review. 

The previous  2 sets of “ABC” type corrections, have been retraced by 100% or more, which helps to confirm that a bigger bullish phase is still in progress. Yes, we could be heading up to a big “D” wave, but that is still some time away.  Crude oil has a long way to go, but the $58 price level is the most important price peak that oil would eventually have to retrace. We are still about $8-10 away from achieving this price target. 

The Gold/Oil ratio with the December contract, is still very decent at 25.38:1.  This is a far cry from being expensive when we use gold as money. I manually log many gold ratios in a little book of most of the asset classes that I cover.  Not until we start to calculate very expensive Gold/Oil ratios, will it be time to look for an end to any big bull run. When this starts to happen, then the Gold/Oil ratio will start to compress pushing it closer to the 17:1 ratio. 

When the bears attack, the mainstream media will pump out all the bearish news it can find, and when it can’t find any they will just copy some other analysts reason,  or they will just make up shit.  Fundamentals can change so fast that they are unreliable. Besides that, commodities move in exactly the opposite direction of fundamental news, which the majority will never understand.  Turning bullish in the middle of a world oil glut is not something the majority will ever do, but the seasoned contrarians instinctively know to act the opposite way of the bearish crowd.

 Oil Rises To 8-Week High Following Unexpected U.S. Inventory Draw | OilPrice.com

Here is a link to a typical story about an unexpected drawdown of crude oil inventory levels.  

Crude Oil Intraday Bullish Review

I have switched to the December contract which has more volume, creating better detail on the intraday and daily charts.  Any Gold/Oil ratio I calculate with the December contract will compress the Gold/Oil ratio a bit, but in the long run it will create a minimum amount of distortion. 

I’m sure that many reasons have been used to explain this bull market, while some even say that the glut is disappearing fast. The news about the glut, has miraculously vanished or has been drastically reduced, but I’m sure these glut stories will return once a longer or bigger correction starts to play out. 

The world is in disarray when it is related to oil production, as fundamentals change so fast, they think we are going to  crash to new record lows. From my perspective, I think any big bearish decline only has a slim to none chance of coming true at this time. Yes, some bearish rallies are huge, but the majority does not know the difference. They only care that oil keeps going in the same direction they are betting on. Crude oil has had a very choppy start since the 2016 bottom, and we could be on a “D” wave bullish phase.

This bullish phase may still take until late 2018 to finish, which would match the peak in commodities back 100 years ago in 1918.  Many cycles repeat in 100 years, and at that time some commodities experienced a 13 year bear market that didn’t end until 1932. If we use 2008 as a major peak and no new record highs get broken, then 2021 would also give us a 13 year market. 

I haven’t had to make big adjustments in my wave counts at this time, but I’m sure some unforeseen violent move will keep us guessing and doubting this bullish phase. Bullish phases don’t end when the charts are pointing down, they end when the price is near vertical, like what happen after the oil price peak in 2008. At that time the fundamentalists were screaming for  the price of oil to head to $200 +, yet oil turned and crashed right down to about $34.

Today the Gold/oil ratio sits at 25.52:1 which is still very decent from my perspective. Crude oil started to crash in 2014, from a 17:1 ratio, and stopped when this ratio became a 44:1 ratio. This is a dramatic shift in the Gold/Oil ratio, which would take many years before this ratio becomes compressed again. One day, this ratio will start to push 17:1 or even 9:1, and until then this oil bullish phase should continue. Our next 3 big prices highs to beat would be, $53, $55 and $89 

Crude Oil Intraday Update

So far crude oil is still creating higher highs, which I can fit into an impulse type of wave.  Technically, oil still has to go above the $47.50 price level.  This does not stop any wave pattern to crash very deep if the present rally is just another “B” wave rally.  The $45 price level could be a place for a turning, but much more than that price level, could mean a bigger correction is in play. 

The emotional traders panic if an unexpected inventory news release is published, but they also ignore the potential for the mature oil fields to actually be losing production output.

 Low Oil Prices Lead To Fastest Mature Fields Decline In 25 Years | OilPrice.com

From an oil glut to a potential shortage,  would have nothing but a positive effect on the price of oil.  Eventually oil will have to move past, the present $58 high, before it ever has another chance at breaking to new record lows again. When the expert oil consensus was $40 or lower,  this market ignored those forecasts and has now proceeded higher

I love it when the markets go the exact opposite way, which many find strange and perplexing. This is not a new phenomenon as it has been going on for Eons, which the contrarians of the world understand extremely well. 

As I post oil is still crashing, so in the short term, oil can still paint a very bearish picture. 

Crude Oil Intraday Crash Update.

The last attempt at a bottom turned into a failure as crude oil kept right on crashing to a new low. The $44.20 price level is about a 60% decline, but there still could be a bit of downside to come.  If any impending rally just refuses to play nice, then we could be looking at a potential 4th wave top. 

Any potential 4th wave top would then produce a new bear market low as  it would also be a technical requirement to do so. Right now it looks like a great potential zig zag decline, which is a corrective wave from my perspective.

 In a line type chart, that “A” wave spike does not show up making the zigzag more even in length. Rarely are zigzags perfectly even, like what the little blue book says, and the 1929-1932 zigzag decline clearly demonstrated this.

The Gold/Oil ratio is still very decent at 27.30:1. Eventually we should reach a price when crude oil will become expensive again, but this may not happen until the Gold/Oil ratio reaches 17:1 or lower.  I don’t think we will reach any extreme ratio like it was in 2008, (8:1) so when we get close it will be a good idea to make more frequent calculations.  

The fundamentals change faster than we can change  our socks, but in commodaties the markets do the opposite of what any bear market usually suggests.  Huge bullish phases have all started right in the middle of  world gluts, as this is also the time when crude oil is the most hated asset class. 

I visited my contrarian friend yesterday who gets Steven Jon Kaplan’s newsletter, and there is no indication that contrarians are in a panic to sell. 

The time will come when they will get bearish, but that still can be a year or so into the future. 

Crude Oil Intraday Crash Review

There is a good chance that my entire oil degree level was out by two degrees at the 2008 peak. Then early last month,  we finished another crash before it started to build another 5 wave sequence heading right back up. The May rally looked like an impulse, but fell apart once it progressed. 

Once this bullish run was completed, then oil proceeded to crash yet again, which could have ended early this morning. It sure looks like another zigzag correction, complete with alternating  A5 and C5 waves. A5 is an impulse, while the B5 wave is a diagonal. 

Every zigzag or 3 wave crashes can produce another leg up, which will retrace the entire zigzag and then add on  much more. In other words, we still need waves 3-4-5 to develop.

I started with the lowest 4 degree levels on my list, making the wave 1 top a Subminuette degree. Once this run starts to materialize, and I still run into too many waves I no longer have degrees for, then I would bump up the degree level, one higher degree.

With a potential Intermediate degree 4th wave bottom in late 2015, we would think that we are going to get a 5th wave that will soar to the heavens, impressing us to no end!  I doubt that will happen, as oil is prone to developing into another zigzag where the C5 wave contains an extension. 

Just because oil crashed, does not mean it’s the end of  the oil bull market, as all crashes in a bull market are “ABC” patterns. “ABC” patterns create, the higher lows, as this is the description of a bull market.  In a bull market and after any 3 wave crashes,  the markets will always push higher.  

Not until crude oil becomes overbought again, will we need to worry about any return to a new bearish trend. 

I use the August contract above which may last about two months, before I switch again.  This also calls for a Gold/Oil ratio calculation, which surprisingly has improved. Today we are at a Gold/Oil ratio of  26.65:1 which is one of the best showings in the last two months.   

Any potential 5th wave can give us two types of patterns, and at this point it is still unclear which one that oil will take. One thing is certain,  it will take the rest of the year to confirm what pattern we will eventually get. In the short term all we can do is track, what we do have.