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

The commercial traders COT report, shows them in a net short position, but they are not that radical at this time. With the speculators or non-commercial traders, it’s a different story. They are net long crude oil by a ratio of  over 3:1, which puts them in a bull trap. Both groups can’t be right  and it’s usually the commercials that have the least amount of risk. They are much closer to the industry than the speculators are. The media most always report on what the speculators are doing, not what the commercial traders are doing. In the long run the two groups should reverse their positions, which will be the setup for another huge oil bullish phase.

When changing months it is important to update the Gold/Oil ratio as well. This ratio has hardly changed this year and has been between 21:1 and 22:1 most of the time. This lack of ratio movement tells me that it could be at a double or a triple top, and a reversal would have to happen once crude oil heads back down.  During the rest of this year we want that ratio to be expanding, but the high ratio of 44:1 created at the 2015 low may be a tough act to follow. An expanding ratio means that crude oil is getting cheaper when we use the cash price of gold as the measuring tool. (Money)

From the 2008 bottom to the 2014 peak, crude oil rallied along with solar cycle #24 and may be attracted down until when solar cycle #25 starts.

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