Crude oil made an ugly decline (diagonal) into the bottom of April, 6, before crude oil soared once again. Crude oil has now rallied far enough to where it has resistance at my previous wave 2 peak in Micro degree. Also a H&S pattern is developing, which in a bear market rally is a bearish sign. In a bull market this H&S pattern would be just a temporary stop. The real reason for the rally is that all of the protective buy stops are being triggered by some news release regarding declining inventories. The news does not suddenly turn a bear market into a bull market, even if it looks like it.
This rally will only get confirmed as a bearish rally once this entire intraday bullish phase is completely retraced. Even the December crude oil contract is still lower in price than the June contract, by $2.75 a barrel. This does not bode well for a huge bull market in oil to keep going. As I post crude oil has broken the $65 price level by a small margin, but still a far cry away from breaking to new record highs.
Add to the fact that most commercial traders are net short crude oil with a 20.58:1 Gold/Oil ratio, I will remain bearish until such a time when a big correction has taken place or is completing.
As fast as this rally charged up, it can crash just as fast, so hang on to your britches folks, as this could get rather violent swinging into the opposite direction.
Longer term we could be heading back to a world oil glut and they will start to store oil in very large crude oil tankers. As soon as all the experts realize that an oil glut is here, then it will be over and the price of crude will soar again.
Crude oil has a huge inverse Megaphone (Wedge) pattern which is a very bullish indicator and can produce amazing bull markets. Again, this is a bit early to describe a big bull market in oil if the oil charts presently contain an inverse zigzag!