CRUDE OIL UPDATE (10:00 pm EDT)
We have been watching for the end and bottom of the current medium-term cycle in crude oil as a possible spot to buy (see my previous blog on crude from April 20). The April 17 low at $77.22 (July contract chart) may have been it, but that low did not fall inside any reversal zone, which we like to see at significant turning points. Prices have been rising from there and are now testing the $96 blow-off top from March 9. This is happening inside a strong reversal zone that ends on Friday. A "double-top" could be forming here to be followed by a sharp correction back down to either the end of the older medium-term cycle (most likely), or the first sub-cycle bottom of a new medium-term cycle.
Considering the unstable status of President Trump's peace negotiations with Iran, it is not surprising to see crude prices surging now. They may even exceed that March 9 high before turning down. If things get really bad, we could see this "reversal" turn into a breakout instead of a reversal (which is rare, but it does happen occasionally, and the current circumstances would seem to encourage it). I am remaining on the sidelines of crude for now.
We have been watching for the end and bottom of the current medium-term cycle in crude oil as a possible spot to buy (see my previous blog on crude from April 20). The April 17 low at $77.22 (July contract chart) may have been it, but that low did not fall inside any reversal zone, which we like to see at significant turning points. Prices have been rising from there and are now testing the $96 blow-off top from March 9. This is happening inside a strong reversal zone that ends on Friday. A "double-top" could be forming here to be followed by a sharp correction back down to either the end of the older medium-term cycle (most likely), or the first sub-cycle bottom of a new medium-term cycle.
Considering the unstable status of President Trump's peace negotiations with Iran, it is not surprising to see crude prices surging now. They may even exceed that March 9 high before turning down. If things get really bad, we could see this "reversal" turn into a breakout instead of a reversal (which is rare, but it does happen occasionally, and the current circumstances would seem to encourage it). I am remaining on the sidelines of crude for now.
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