This is the September crude oil contract and the more I stare at it the better I like oil as a 4th wave expanded flat rally. Chances are good that next week this rally could end and oil should resume its bearish trend.
That means that this oil rally is just another bear market rally even though it’s a small one. It takes very little upside for crude oil fans to turn bullish again but from my perspective, we could be facing a much bigger and longer bearish trend than we can imagine at this time.
Some analysts keep saying that oil is close to a bear market but this is a very narrow point of view. The real bull market in oil died in July 2008, with every rally since then being completely retraced.
Since 2008 oil had two major crashes followed by bullish phases. Analysts were convinced both times the crude oil would soar to the moon again but oil turned around and headed south each time.
The 2016 oil low may be the end to the oil bear market but the rally that followed sure has some impulse pattern issues.
The Gold/Oil ratio is about 24:1 which should expand some more as the price of oil declines.