Last Thursday crude oil prices plummeted down to $63.57 (June contract chart) intraday before snapping back up and closing at $68.56. That deep low could have been a sub-cycle low in a new medium-term cycle that started on March 20 at $64.58 (this has been our preferred labeling), but if it was, the cycle could be turning bearish because the price went below the start of the cycle. Another possibility is that last week's low was a double-bottom to the March 20 low and represents the final bottom to an older medium-term cycle. (This makes sense because that March 20 low was a little bit early for the medium-term cycle to end.) If this new labeling is correct, prices should be bullish now and soon rally above the 14-day and 45-day moving averages (which are now converging and crossing around $75.50).
The upcoming strong general reversal zone May 11 - 19 is relevant to crude, but it is also overlapping with another reversal zone specifically for crude May 16 - 25. It's unclear at this point if these time frames will correspond to a significant high or low (or both) in crude. We will remain on the sidelines of this market until we are more clear about the current medium-term cycle labeling. We are also concerned about the potential start of a new 3-year cycle in crude which is due any time now and would be an ideal spot to go long as a significant rally would certainly follow from there.