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. 

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