Crude OIl Makes A Swan Dive.

I extended my Minuette degree wave 3-4 with this run into last night being one ugly 5th wave. Early this morning crude oil started to implode, which was also a diagonal. Trump dumps the Iran Deal and oil implodes. Of course, all the forecasts for higher oil prices soon emerged with one forecast at $82.50. I laughed when I read that as it is another example of consensus forecasting.  This morning this June oil contract peaked at $71.80 and then started a decline.

Only time will tell if this peak will hold as my 4th wave in Intermediate degree might find a home for a little longer than just a few hours.

What is far more interesting, is what happened with the Gold/Oil Ratio as oil went vertical. We had a June Gold/Oil ratio managing to compress to a little over 18:61.

This morning the Gold/Oil ratio hit 18.35, which is still the most expensive ratio for this bull market so far.  As the crude oil prices decline further, this ratio will start to expand again.

This crude oil bull market is one of the most lopsided trade setups that I’ve seen in years,  as the professionals are geared for higher oil prices to come.

All these expert fund managers are already in, which has been reported on in great detail.  From my perspective, there is no one left to get in as the “Greatest Fool” has arrived buying into crude oil at $71.80.

The Gold/Oil ratio is a powerful tool as it works on a mathematical base, which the majority ignore. Many of these extreme oil price forecasts mean nothing if you just make a simple ratio calculation.  A $300 oil forecast would give us a $5400 gold price, which is not going to happen. A quick calculation will tell us that the $300 oil forecast is just a mythical dream, not based on reality!

Crude oil is very close to cracking the $70 price level again and that could be the trigger for “sell”orders to kick in.

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