Some oil bull is expecting a jump to $150, but this is not what I see that’s going to happen. It’s more like oil is going to crash before it soars again. There is a simple calculation that any kid can make, and that is apply the Gold/Oil ratio. The reason people don’t use the simple ratio is because they love to make shit more complex, not easier. I have been using the Gold/Oil ratio for close to 20 years, and I gave it to the youngest green horn that I have contact with. I explained this to a Millennial and my son inlaw this week already. Another reason they don’t use the ratio as an indicator, is because it takes work to maintain a simple calculation, and in general they don’t want to do the work. This is also “very” true in all wave counts that you see on the internet today.
The WTI ratio can be used for this, but expect slight fluctuations. We are sitting at a 17:1 ratio which is getting to the extremes in a bear market rally. The 2014 peak, also a bear market rally, this ratio crashed to 17:1 just before crude oil imploded. Traders in 2014 were all bullish sitting just above a DC cross and they sure are doing the exact same thing this summer.
I decided to quickly check the Gold/Brent ratio and it’s worse than the WTI. The Gold /Brent ratio hit 16.14 today so Brent crude is also confirm that we are at a bear market rally extreme.
Oil is in a huge diagonal structure that “all” commadaties have, and the 2018 peak was the real Cycle degree wave 3 peak. Every month and every year that goes by and it doesn’t destroy the wave 3 location, helps to confirm it could hold for a very long time. When looking at any of my wave counts, never forget where I’m counting from. Think of the ending diagonal turned on its side and slightly pointing up. The bull market From 1999 to the 2008 top was “NOT” an impulse folks. It was a diagonal move with “7” waves in it, not 5 waves. The majority of all expert wave counters count 7 waves as 5 waves! This is lazy wave counting!
From the 2016 bottom, as soon as you see the very first “A” wave in Minor degree, I’ve already started to paint you a picture, that a bear market rally is in progress. The wild expanded correction did happen and has produced the “thrust” of a “C” wave bull market. The Brent Crude Death Cross is below us, as we had our first DC in 2014. The sequence is (DC,GC,DC,) for bear markets, and then (GC,DC,GC,) for bull markets. In general all these crossings work very well with Cycle degree wave counting.
Any support is down at the $40-$45 price range with is the same for WTI. A little 10-20% correction is not going to do it, not by a long shot as Commercial trader positions a rising wedge and Gold oil ratio will implode the price of oil worldwide. I’m sure were going to see another world oil glut and until that arrives no bull market will form. 25:1 an 44:1 were bear market low ratios, and they all produced bull market from those ugly lows.
One quick way to ceck any outrages oil price claims is to take the $150 oilprice any muliply it with the present ratio of 17:1 and you get close to a $2500 gold price. Any expert oil forecaster is also, unknowingly forecasting a gold price as the Gold/Oil ratio is connected with an unbreakable elastic band! It can stretch from maximum to minimum, but it will not break. Those that tell the public it can break are full of bullshit! Fundamentals will always tell you the wrong things at the extremes, so all those freaking oil supply and demand numbers mean nothing, as a world oil glut is more a certainty, than a world oil shortage is.