CRUDE OIL UPDATE (11:30 pm EDT)
This week, crude oil prices have shown us how volatile they can be during times of war in the Middle East. Prices jumped to $119 (April contract chart) on Monday before falling back to close around $95. The next day, prices retreated further down to $84. They seem to be headed back up again today, but we are still inside a reversal zone specifically for crude (March 3 - 12), so a top may be forming here (possibly a double-top near $100). If that's the case, we could see crude rolling over now with prices heading lower into next week. On the other hand, the ongoing conflict with Iran could push prices even higher. Sometimes (rarely), we see breakouts in reversal zones (instead of turnarounds), and the current geopolitical environment increases that possibility.
It is fairly late in the current medium-term cycle of crude, so the safest thing to do now is to wait for the final top in the cycle (it may be in already with that $119 high) and then the final corrective bottom for a possible spot to buy. It would be foolish to chase the current rally based solely on the current war, especially this late in the cycle and inside a strong reversal zone. I am remaining on the sidelines of crude oil for now.
This week, crude oil prices have shown us how volatile they can be during times of war in the Middle East. Prices jumped to $119 (April contract chart) on Monday before falling back to close around $95. The next day, prices retreated further down to $84. They seem to be headed back up again today, but we are still inside a reversal zone specifically for crude (March 3 - 12), so a top may be forming here (possibly a double-top near $100). If that's the case, we could see crude rolling over now with prices heading lower into next week. On the other hand, the ongoing conflict with Iran could push prices even higher. Sometimes (rarely), we see breakouts in reversal zones (instead of turnarounds), and the current geopolitical environment increases that possibility.
It is fairly late in the current medium-term cycle of crude, so the safest thing to do now is to wait for the final top in the cycle (it may be in already with that $119 high) and then the final corrective bottom for a possible spot to buy. It would be foolish to chase the current rally based solely on the current war, especially this late in the cycle and inside a strong reversal zone. I am remaining on the sidelines of crude oil for now.
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