UPDATE ON CRUDE OIL (3:00 pm EDST)
The current medium-term cycle in crude oil (which started with the $68.85 low on Dec. 13, 2023 - May contract chart) is getting old. This means we should be anticipating the cycle's final peak soon, followed by a sharp correction down to the final cycle bottom (which is due anytime by mid-May). The current labeling of sub-cycles in this market is ambiguous, but it looks like the low of $76.43 on March 11 could have been a significant sub-cycle bottom. The steep rally from there broke bullishly above the resistance of an upward sloping channel line and made an isolated high ($83.12) on March 19 before dipping back below the line. That isolated high was inside last week's general reversal zone, so if it holds, it could be the final top of the current medium-term cycle. If so, prices should now fall sharply to the final cycle bottom. But if instead crude rallies above $83.12, we will have to wait a little longer for the final top and a subsequent correction that should last at least two weeks and test the 15-day moving average (now at $79.80 and rising).
The bottom line here is that we are waiting for the final corrective bottom to the current medium-term cycle in crude for an opportunity to buy. This market looks very bullish into the end of this year, but we are being very cautious in our trading at the moment because we are still not certain if a long-term 4-year cycle in crude ended way back on May 4, 2023 around $65. If it did, crude should rally strongly now. But if that 4-year trough is still ahead, prices could take another steep drop back to the $60 - $65 area anytime before July before any serious rally can get underway. If crude can rally and close convincingly above $83.12 soon, we will assume that 4-year trough is behind us and a new bullish 4-year cycle has started. For now, we remain on the sidelines of this market.
The current medium-term cycle in crude oil (which started with the $68.85 low on Dec. 13, 2023 - May contract chart) is getting old. This means we should be anticipating the cycle's final peak soon, followed by a sharp correction down to the final cycle bottom (which is due anytime by mid-May). The current labeling of sub-cycles in this market is ambiguous, but it looks like the low of $76.43 on March 11 could have been a significant sub-cycle bottom. The steep rally from there broke bullishly above the resistance of an upward sloping channel line and made an isolated high ($83.12) on March 19 before dipping back below the line. That isolated high was inside last week's general reversal zone, so if it holds, it could be the final top of the current medium-term cycle. If so, prices should now fall sharply to the final cycle bottom. But if instead crude rallies above $83.12, we will have to wait a little longer for the final top and a subsequent correction that should last at least two weeks and test the 15-day moving average (now at $79.80 and rising).
The bottom line here is that we are waiting for the final corrective bottom to the current medium-term cycle in crude for an opportunity to buy. This market looks very bullish into the end of this year, but we are being very cautious in our trading at the moment because we are still not certain if a long-term 4-year cycle in crude ended way back on May 4, 2023 around $65. If it did, crude should rally strongly now. But if that 4-year trough is still ahead, prices could take another steep drop back to the $60 - $65 area anytime before July before any serious rally can get underway. If crude can rally and close convincingly above $83.12 soon, we will assume that 4-year trough is behind us and a new bullish 4-year cycle has started. For now, we remain on the sidelines of this market.
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