UPDATE ON CRUDE OIL (1:00 pm EST)
My last post on crude oil (Dec. 29) has not changed. The low on Dec. 16 still appears to be the start of a new medium-term cycle. Prices rallied from there, but couldn't get above the 45-day moving average (so far). Crude may be forming a double-bottom low around $56 (Feb.contract chart). If so, we could see prices heading back up.
We just entered a reversal zone specifically for crude (Jan. 6 - 15) that ends next week, but it overlaps with our general reversal zone for all markets (Jan. 13 - 23). This means we could see a significant top or bottom (or both) within this wide time frame. If prices continue lower and break below the start of the cycle ($54.89), the cycle trend would turn bearish and be pointed down for many more weeks. The double-bottom described above, however, would be more bullish and lead to prices rising to test the downward sloping trendlines I described in the Dec. 29 post:
"There are currently two downsloping upper trendlines in the chart of crude oil. A break and close above both would suggest the more bullish scenario...Those lines are presently around $70 and $73 and falling. If prices stay below those lines, crude could roll over and fall lower into the first few months of 2026."
I am now looking at a downward trendline around $68 and one around $62. There is also strong resistance around $60. Any of these levels could suppress and turn down a rally, but any break above would suggest the trend is turning bullish. When the longer-term cycles in this market become clear, it will be easier to establish a trading position. Until then, I am staying on the sidelines of crude.
My last post on crude oil (Dec. 29) has not changed. The low on Dec. 16 still appears to be the start of a new medium-term cycle. Prices rallied from there, but couldn't get above the 45-day moving average (so far). Crude may be forming a double-bottom low around $56 (Feb.contract chart). If so, we could see prices heading back up.
We just entered a reversal zone specifically for crude (Jan. 6 - 15) that ends next week, but it overlaps with our general reversal zone for all markets (Jan. 13 - 23). This means we could see a significant top or bottom (or both) within this wide time frame. If prices continue lower and break below the start of the cycle ($54.89), the cycle trend would turn bearish and be pointed down for many more weeks. The double-bottom described above, however, would be more bullish and lead to prices rising to test the downward sloping trendlines I described in the Dec. 29 post:
"There are currently two downsloping upper trendlines in the chart of crude oil. A break and close above both would suggest the more bullish scenario...Those lines are presently around $70 and $73 and falling. If prices stay below those lines, crude could roll over and fall lower into the first few months of 2026."
I am now looking at a downward trendline around $68 and one around $62. There is also strong resistance around $60. Any of these levels could suppress and turn down a rally, but any break above would suggest the trend is turning bullish. When the longer-term cycles in this market become clear, it will be easier to establish a trading position. Until then, I am staying on the sidelines of crude.
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