One thing we can trust oil to do is to go in the opposite direction when the oil bulls call for oil to go much higher. When the oil media calls for higher oil prices, then I ask a silly question, “Who are they talking to?” What group of smart investors or traders are still lurking in a cave somewhere that just loves to buy oil at much higher prices?
How oil has crashed so far shows us that it was the bears hiding in the forests that came out and decimated the oil bulls, at least for now!
I will not repeat all the fundamental news for you as we can have a thousand reasons put out by 1000 different blogs.
No trend lasts forever and how much they retrace down to gives us an idea if we are in a bear market rally or a true bull market.
In the chart above between the “B” wave bottom and “C” wave top in Minor degree, we want to know if it is a bear market rally or not. We are at about a 50% retracement right now, but that does little as we can also get 80% plunges.
Nothing but a complete retracement clearly visible on daily charts would have to happen, after which the early 2019 bullish rally is a bear market rally.
The most expensive Gold/Oil ratio hit about 19:1, after Fridays oil price thrashing the ratio ended at about 24:1. This was a quick jump in the ratio and we may be ready for a counter-rally in June.
Of course, we could see a very violent counter rally and it to must be a fake bullish phase if the oil bearish phase has not completed.
Oil has been in a bear market since the 2008 peak, where every counter rally since then has already been retraced. Since the July 2008, peak oil produced two major lows which would work for a normal correction but in an 11-year bear market, 3 major bottoms can also happen.
11 years sounds like a solar cycle to me, which I call a fundamental indicator that most wave analysts ignore.
Even though the overall decline needs to go much deeper there are no daily trading limits in commodities, that I know about. You can’t get a more vertical drop than what was produced on Friday so the bears could be in a short term bear trap. I closed off all short positions in Forex Oil units on Friday and even took a small long position.
The moving average lines will get pulled down until another oil death cross is formed.