Brent Crude: Intraday Rally Review

July Is the next active month and we can see a small rally has taken place which could be part of another zigzag in Minute degree.  For this particular bear, rally wave count to last Brent crude must crash below $67 which would be about another $6 price drop!

Of course, all the bearish reasons why Brent crude is crashing will come out, as it’s the analyst’s job to produce the fundamental reasons why.  Oil has been crashing even though commercial hedgers were still long last week.

I’m pretty sure some analysts will blame the price swings on climate change as the Green parties seemed to take control in Europe.

The fact is any price surge in oil will always get stopped as traders start to see a temporary glut in the making.
The Gold/Brent ratio is 18:1 which is still very expensive to my liking.
Brent could remain bearish for a month or so but summer holidays may change the supply and demand scenario again.

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Brent Crude Daily Chart Taking A Dip?

This is a very rough wave count as I can’t count it as an impulse rally due to just too many diagonal wave structures. There are big differences between the May contract and this June contract that very few people see or even mention.

Brent has peaked on the 25th and about the $75.50 price level.  Any Brent move that will turn into a correction cannot completely retrace the run that oil has had since the 2016 bottom.  All we can do is sit and wait for this to play out as a 60% net crash can happen.

Actually, Brent oil is still under a death cross and oil would have to soar again to complete the impending golden cross or a couple of quick moves Brent oil could be back into a death cross. Right now the 2 MA lines are making a tweezer type of a move so something should happen to make this summer a bit less boring.

There are not daily trading limits in most commodities which is only one of the reasons why oil does produce wild moves in both directions.

I don’t have a very big Gold/Brent ratio database in progress but we are sitting at about a 17:1 ratio right now which is the most expensive Brent has been this year. We did record a 15:1 ratio, so Brent is very close to record expensive ratios. again.

Oil pushing record highs recently is exactly what the elected officials want as they conduct a war on fossil fuels. All the climate change alarmists are nowhere to be seen as they should be jumping for joy about higher gas prices.

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Brent Crude Daily Chart Update

This is the June 2019 contract which topped out on February 22 at the $67.60 price level.  Brent crude never made it to the 200-day MA where we normally would expect resistance. Brent is also on a little rally as I’m posting,  so the entire expanded pattern is not written in stone just yet.  Even if another leg up is goning to take Brent to new record highs I would like to see a deeper correction develop. That could take Brent down to the 50-day, MA at about the $60 price level.

Brent is still under the effect of a Death Cross and any Golden Cross is still nowhere to be seen.  The Gold/Brent ratio is at 20.30:1 which is much better, but getting back up to the 17:1 range we used to have.  The commercial hedgers positions are too close to being neutral, so they will just give us false readings at this time.

 

At this time there may not be anymore updates until next month.

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Brent Crude Daily Chart Update

The big drop in Brent coincides well with ETI oil but with a small price difference.  The near vertical drop in the oil crash with this daily chart does not do it justice as with a weekly chart this 10-12 day crash was straight down. It looks like there is an expanded pattern involved as the decline is just to steep for a normal 5th wave.  These fast moves travel at maximum speed and maximum speed can never be maintained for any length of time.  One day they will invent an indicator that actually measures the speed limit of the price move.

We should find out soon if the impending counter rally will happen and if it does, this rally should give us 5 waves up in Minuette degree. You can read a 1000 different analysts fundamental opinions, and you will get a 1000 different reasons why oil has crashed. It will make your head spin trying to figure it out. From my perspective technical indicators are far more trustworthy and objective. Besides fundamentals are lagging indicators.

There are many other reasons as well, like the Gold/Brent Oil ratio which reached 23.45:1. This is now the cheapest it has been in all of 2018! I don’t have a big database set-up with the Gold/Brent ratios but enough to see one type of extreme.  Once this rally does start to move then we should see the Gold/Brent ratio start to compress again.

Even the commercials are net long by a good margin but still not at an extreme. The speculators are in their normal Brent Crude bear traps as they figure that the trend is still down. The only way for the speculators to get out of their bear trap, is they have to buy or close off all their short positions.

I have been trading WTI Forex oil units and I added one Brent crude long position as I post.

The Death Cross on this chart happened at the $72 price level and we have witnessed the results of what Death Crosses can do to investments.  I would rather be early about any counter rally than miss a move that could contain a 5 wave run.

 

 

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Brent Crude Rally Update

 

 

This is a daily chart from the  February 2019 contract month as all 2018 contracts are starting to end. Brent like WTI has held its bottom price, but don’t get all excited about some major bullish move that will provide trading bliss with no worries. Good luck with that, as trends do not just reverse because of some single event or conference event.

Last month Brent crude hit a low of 57.78 and started a reversal producing another spike in the process. There should be more upside to come as small degree 5 wave sequences have started to develop. Any zigzag can produce nice impulse waves, and it is just a matter of time when this Brent crude run starts to run on empty.

Commercial hedgers have had net long positions for some time, but they have massive short positions in WTI. Two conflicting indicators by any stretch, so a call for this bullish move to eventually end will not be popular.

Since May 2018 I have been tracking the Gold/Brent ratio which can tell us a different story. Today it sits at 19.99:1, which is a bit cheaper than what it was at 16:1, but still on the very expensive side when compared to the gold cash price.  Yes, there are small differences between WTI and Brent which can change the ratio a bit.

I don’t look for some wild Fibonacci retracements as nobody really knows what wave count we are really on. Looking for a previous counter rally peak is quicker and far easier to look for another potential turning. This could be at the $68 price level. Everybody gets a Santa gift this December as investors jump back on the bullish bandwagon. Emotional panic moves in or out of an asset class never last that long as most of it can be due to panic short covering. All fundamental reasons for oil’s bullish move can’t be trusted as there is a lot of cheating going on with fake news as well. You’ve heard about fake news and one source of fake news is just propaganda practiced by every dictatorship around the world. Even democracies get in on the propaganda wars.

 

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Brent Crude Oil Intraday Crash Update.

 

WTI Crude, Brent Crude and RBOB gasoline, have made a very strange top, which we can see when switching between daily and weekly charts. This happens many times with futures charts, and the shorter version of this explanation is that an expanded top may have also formed. In the last few days, I have been reading stories about what is causing the crash, and to no surprise, there were no shortages of different reasons why Brent crude is crashing. We may focus on OPEC, but at the same time the EPA comes out with inventory numbers that oil traders didn’t like.

President Trump has given a “Green” light for Saudi Arabia to produce as much oil as they want! If that wasn’t a hint that oil prices were coming down, then nothing is!

The “Bullish Exuberance” in Brent crude oil is starting to fade, but how deep this correction will go is still a flip of the coin. We are presently in an oil rally, so more upside could be coming.

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Brent Crude: Still Pushing The Bullish Buttons.

 

One more push to a new record high! Sure that can happen as we approach the $80 price level again. Of course the stories about oil going to $100 again all are starting to sound like a broken record stuck on “repeat”. Can a 4th wave rally surge this high and still be in a bear market rally? Of course it can, as it could even dip into my wave 1 bottom. Commodities play a different game and normal wave counting methods will never work. This is all part of a Cycle degree zigzag correction which has 3 parts to it.

It may seem like the 2015 bottom was part 3, but fooling the majority all the time is the job of the markets. When the Gold/Brent ratio is an eye-popping 15.10:1 then we are pushing the bounderies of being very expensive when priced against gold. In the long run I’m sure we will end up with another major world oil glut as recessions happen every 10 years or so. Any recession in the future would be over as soon as solar cycle #25 starts to break through.

 

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Brent Crude Weekly Chart Update

 

Brent crude is struggling trying to break higher, and next month should tell us more if this so called bull market has any chance to soar higher. I see a rising wedge which is an extremely bearish pattern, which should never be ignored. The bullish phase that started in early 2016 is a bear market rally from my perspective and in order for that to get confirmed then Brent crude will completley retrace this bull market and crash to new record lows. Deflation is coming folks, where commodities also take big hits in prices.

Today the Gold/Brent ratio is sitting at 15.84:1 which makes Brent more expensive that I have records for. I will continue to calculate this ratio, so I have a better longer term data base to work from. In many respects the Gold/Brent ratio is the same as the Gold/WTI ratio is from which I have a huge data base of ratio records.  I have a pool of about 20 ratios that I keep and is one of my best in-house generated signals. Math doesn’t lie, only people do, so ratios are a good objective set of indicators to follow. Very few are willing to do this work, so out working the lazy analysts is a walk in the park.

You can tell any lazy wave analyst by all the detailed wave counts they always make. I always try to be 3 steps ahead of the crowd and confirm a wave count 3 degrees lower, which is also 3 steps ahead of the crowd. Being one step ahead of the crowd is not good enough in today’s world, when we make longer-term trading decisions. There is no way that gold will soar if the oils are going to crash as the Gold/Brent ratio will stop that silly thinking in a flash.  Any kid that knows how to track the Gold/Brent ratios can do a better job of forecasting the oil price than what the experts do.

At the extremes fundamentals will always tell us the wrong things as the 2008 peak was. The experts did not see the oil crash coming in 2008 as I had it documented very well.  You don’t even need extremes if you pay attention to the news headlines. When they all start to think alike, then chances are very high that they are also wrong.  It just about always justifies betting on the opposite direction when the herd starts to sound all the same!  In the gold sectors this works very well as it is made up of very emotional investors. Oil investors get a bit hostile when you mention that oil can crash to new record lows.

Just look at the nose dive that oil took in 2014 and 2015, so what has happened once before, can happen again.

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Brent Crude 2008-2018 Review

This is the September weekly chart with 1500 custom bar settings. The COT reports do not show any real extreme, but the Gold/Brent ratio does. Since May this ratio has been averaging 17:1 .Which is about the same as the Gold/WTI ratio is. They are still so very bullish on oil that recently they say that “$150” crude oil is coming. That will not work as gold and oil are linked via their respective ratios. At 17:1 any oil price can crash like WTI did in 2014.

No Death Cross on Brent has happened, on the daily, weekly and monthly charts! We had the Brent Death Cross at the top in 2014, and the Golden Cross just formed earlier this year. With a Golden Cross already done Brent crude should explode in price! The 50-day MA can bend down and slice right through the 200-day MA. Before you know it the Death Cross has formed and Brent Crude keeps heading south.

The hedge funds with WTI are still so bullish that they are net long by a ratio of 8.35:1. I consider 4:1 ratio to the extreme side while the commercials only have 1.89:1 net short position. The Brent crude COT reports are not that skewed at all, matter of fact it looks pretty boring. I’m very confident at this time, that the  impending Death Cross, has more power than any COT report, but I need to get more confirming evidence to have faith in what I’m reading.  Commercials can also make dramatic flip flops which I saw some of the currencies do.

No little $10-$20 correction will fix the problem. $40-$45 Brent crude could supply short term support but in the end the world is going to deflate and the Brent crude price will also crash. Fundamentals will “Allways” tell you the wrong things at the extremes, and when the analysts all sound the same, then it’s time to bet against them.

The gold price has been closing below $1200 which is not a good sign, as I expect gold and oil to still crash much more during the rest of this year. Brent crude will not standup to this, so it will crash as well. I will not trade any oil move with USO as it does not reflect pure oil very well at all. I closed my USO short position becuase it was so small of a position, I wanted a bit of extra margin space on my US dollar side.

Have patience as by the end of this year we could be facing a different energy landscape. Oil is being drawn to the solar cycle #24 bottom, but after that oil could soar one more time.

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Brent Crude Oil Weekly Chart: 2012-2018 Review

 

This is the August Brent crude oil weekly chart. In the future I may switch to the December contract as it’s also very busy. I made this chart up for those who are addicted to trend lines. 🙄 I try to use trend lines sparingly with posted charts, but before I put a single mark on the chart, I work 2 or 3 sets of trend lines with my editor. The wave count I’m showing started at the July, 2008 peak when Brent peaked at $148. This is 4 dollars off, from the Fibonacci number of 144. I place a great deal of importance to all the even Fibonacci numbers as they encompass so many caclulations in the stock markets, and all of life as well. Today Brent peaked at $80 after which it started to back off.

Since a corretion seems to be initiated, the top trend line may hold. The brother to the top trend line is at the bottom. The entire 2011-2014 top gave the majority the good bullish feelings and forecasts that oil will never gold below $100 again was a popular theme. Oil rallied to $125 and then started to turn down until it crashed into the 2016 bottom.

This peak was a bear market rally and the market confirmed this with complete retracement of the entire bull market that started in Decenber of 2008. Technically, it looks like a Primary degree zigzag has completed, and we should be off in another 5 waves in Primary degree.

There are some huge loopholes in that thinking because gasoline futures do not confirm new record lows in 2016, unless you want to call it a running flat! That does not fit as well if WTI is a zigzag and Brent being a flat. Ain’t going to happen folks. From the 2016 bottom we have a fantasic rising wedge, which is a very bearish signal that most analysts ignore.

Every Elliott Wave student knows what an inverted zigzag is, but yet they conjure up a bull market just the same. At this pace, the majority got fooled by a Primary degree bullish phase, and now even an Intermediate degreee bullish phase has them convinced that much higher oil prices are on the way. There is no support for a bear market rally once it starts its reversal. The only support may be at the $40-$45 price level if the actual decline produces a zigzag 5th wave.

The majority think that oil can’t crash due to some fundamental reports, but oil has a reputation of doing just that. I have deep respect for oils ability to execute fantastic swan dives. How did the 2014 crash work out? How about the big crash into the 2008 bottom? That 2008 crash hardly showed any subdivisions that you could count. This 2008 crash was extremely steep and is acually a “big” clue that it’s a zigzag and not a flat. With most flat crashes, this pattern is mostly reversed, where the “C” wave part is the steepest. Many may not suspect that a 4th wave rally can go this high, but in my experience they sure can, especially in commodities.

To decide if our present bullish phase is a bear market rally or not, is critical to know and understand.

Another indicator is the Gold/Brent ratio. I have only one reading and todays reading hit a ratio of 16.79:1. In May it was 17:1. This has change little and I would consider that on the expensive side when compared to US dollar gold. In 2014 oil reached a 17:1 ratio before it started to crash down to $28 or so. I would have to do some back checking to find the ratio for the 2016 bottom, but we can use the WTI ratios for Brent as well.

I haven’t found a good Brent COT report yet, but with WTI the commercials are shifted to the short side. This doesn’t get me all excited, about some super oil bull market to suddenly erupt.

The speculators that are chasing this trend are all commited to the long side, the exact opposite of the commercials. Who is the smart money here?  When you get such a high degree of investors all committed to the long side, who is left to jump in? Who is going to jump in thinking oil is cheap at $80? Below our present “C” wave bullish phase, all the protective “SELL” stops accumulate, and when they get hit all the bulls instantly turn into bears.

While everybody turns extremely bullish on oil, I turn bearish as I see a huge downside move coming.

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