USO / CL / Oil have completed a (i)-(ii) off the bottom, with wave (ii) entering into an area of demand that supported price this week, and it is about to begin the very strongest part of the 5-wave fractal in wave (iii), from there it will have a corrective wave (iv) down, then another push even higher in wave (v).
I've highlighted with red boxes the sell zones for each wave and with green boxes the demand zone.
I expect a significant rally starting Monday (or Tuesday at the latest) of next week in oil. I initiated a long position after market hours today.
On a side note, it always amazes me how fractals "predict" news timing events – since the news that OPEC would cut 10 million barrels/day production hit the wire right after wave (ii) completed and just before wave (iii) started (cnbc.com/2020/04/09/oil-jumps-ahead-of-make-or-break-opec-meeting.html).
Trade active
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This is a good area to start a position, as long as CL_1 stays above the prior low, this trade idea is still valid.
Trade closed: stop reached
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CL has broken support, signaling that wave (iv) is complete on the bounce earlier, and wave (i) of v is in progress – there may still be a relief bounce here in (ii) of v targeting the $23 level, but any rallies will be more muted and should be used as an opportunity to trim longs.
Despite the record size of the potential cut, oil prices moved lower on Thursday as investors feared it would still not be enough to combat the unprecedented demand loss from the coronavirus.
“Although 10 million bpd will help the market on the short term to not fill up storage, it is a disappointing development for many, who still realize the size of the oil oversupply,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen.
U.S. West Texas Intermediate fell 9.29%, or $2.33, to settle at $22.76 per barrel. Earlier in the session, the contract had been up more than 12% trade at a session high of $28.36.
“The market has been underwhelmed by the proposed 10m/bd production cut, perhaps because of early expectations of a massive 20m/bd reduction,” said Helima Croft, RBC’s global head of commodities research. “However we contend that it is crucial to turn off the tap off the tap in the midst of colossal demand crash and bring the price war to a swift conclusion,” she added.
Ahead of the meeting, the Street had been watching for cuts in the 10 million to 15 million barrels per day range after Trump said he had spoken to Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman and expected them to announce a deal of that size.
Comments?
vergun
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@apsnt, news cycle clouds judgment; market reactions to news are pre-determined by wave structure, news is simply a catalyst for the wave to unfold. For example, with hospitals filled with Coronavirus patients around the world who would have predicted a 25% stock market rally? All those news followers missed out on this incredible rally. The market is forward looking, that's why following news yields inferior results. I focus on charts, supply/demand levels, and wave structure only.
apsnt
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@vergun, In case of corona if you followed daily infections the numbers started hitting their maximum so that was a great signal for optimism. Depends on the numbers or news you study, I suppose :D. I do believe that China and other customers are stocking up on cheap oil while Russia and Saudis want to ruin the American shale industry. Who knows what the consequences of that will be with unlimited QE. MBS bought stakes in a few European oil companies and I also believe that he wants to raise the price of oil sooner or later and cash in a significant amount on these moves. His strategy is so cunning.
vergun
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@apsnt, it could have been the daily infection rate dropping, it could equally have been the market was oversold, it could have equally been oil was rebounding, it could have equally been we're entering a new earnings season and the downside is priced in – Yes we can theorize about what causes a market move, but it is a pointless exercise because there's no way of validating your theory vs my theory or any other theory. What I do know is that harmonic elliott wave analysis is the most accurate publicly available tool to predict market direction and price – so I abandon attempts to theorize and instead strive to act as a technician.