WTI - Monthly - I call it: "The Beautiful ch-ART"
This is, probably, the most beautiful chart and, probably, the most important commodity that is out there at the moment.
This is going to be a quick review of historic ups and downs on a Monthly chart.
1986, the beginning of the year started with a significant drop in the price. At that time, that was quite a disastrous drop, due to the low amplitude of price movement. WTI was just one of the oil types that suffered a devaluation. Brent, Urals, Isthmus and so on. Probably, some could say, that especially it felt on the Urals type. Soviet Union's economy, that was highly dependent on its oil, suffered a lot because of the price drop. This was one of the crucial moments in the breakdown of the Soviet Union, as Urals plunged, production dropped (it already started to fall from the beginning of the '80ies), the deficit was growing rapidly and the Union states saw this as an opportunity to gain their independence with the help of the West. But that's already a different story.
When the Soviet Union actually started falling apart, in the 1990, the price has shot back up to around $40. But it didn't hold there for too long and it quickly got back down. This time to around $20.
The price remained between $15 and $30 for almost a decade through out the '90ies. It is quite extraordinary to think that for about 8 years it didn't go above $30.
In my opinion, starting from 1998, technology was developing at great speeds. This required a lot of oil, of course.
Also, US invasions into the Middle East didn't help the price to stay low. Once the biggest oil rigs were under control of the US, it was in their interest to drive the price up. The ride up was quite good. I remember those insane (at that time) levels of $50, $70, $90, $110, $130 and $140 per barrel. I remember that analysts were shouting: "Oh my God, we're going to hit $200!". Of course, $200 never happened. And I am wondering if we ever will, because of the way technology is shaping up today and how the appetite for alternative fuel is growing. But let's not guess, let's not rush it there. Let's enjoy our lives right now, but be cautious about mother Earth's oil supplies.
I remember I was trading WTI in 2012 around the $100-$110 level and I was thinking that THAT was the new bottom in that commodity, due to the recent higher levels and the way it flew there. I couldn't believe that in 2016 the price will drop to such a low level, or should I say, back to the '90ies level. Of course, it didn't stay there for too long and quickly moved to the $40s and $50s levels. Now some would say that maybe this is the new bottom and we are ready to pop back up. Maybe it's just me, but I am a bit skeptical about WTI popping back up... for now... I think it could surprise us by giving a last good drop in the price, before shooting back up.
The reason for that would be beautiful textbook formations, like a Bearish Flag, a Double Bottom and this little Head-and-Shoulders that you can see forming from the beginning of 2016 and now. And the Markets must respect that, otherwise everybody will just stop trading and just hit the casinos, because it will become the same, or casinos will be even more fun, because you can at least get a free tea or coffee in there. There will be no logic in the Markets. I'm not saying that there is a lot of it now, but then you might as well just go bet on sports. At least in football you will have a 33% chance of winning (1st team, draw or 2nd team). Or even better, a 66% chance if you bet on a team to win or draw. I understand that Fundamentalists would argue a lot with me, but hey, we all have opinions.
That is why I call it "The Beautiful ch-ART". Because it can tell about the historic developments and why certain things happened in history. And why "ART"? Probably because I'm an idiot who likes the markets and their charts, which sometimes could look like a work of art. At least for me.
As always, guys... keep an eye on the price action!
This is going to be a quick review of historic ups and downs on a Monthly chart.
1986, the beginning of the year started with a significant drop in the price. At that time, that was quite a disastrous drop, due to the low amplitude of price movement. WTI was just one of the oil types that suffered a devaluation. Brent, Urals, Isthmus and so on. Probably, some could say, that especially it felt on the Urals type. Soviet Union's economy, that was highly dependent on its oil, suffered a lot because of the price drop. This was one of the crucial moments in the breakdown of the Soviet Union, as Urals plunged, production dropped (it already started to fall from the beginning of the '80ies), the deficit was growing rapidly and the Union states saw this as an opportunity to gain their independence with the help of the West. But that's already a different story.
When the Soviet Union actually started falling apart, in the 1990, the price has shot back up to around $40. But it didn't hold there for too long and it quickly got back down. This time to around $20.
The price remained between $15 and $30 for almost a decade through out the '90ies. It is quite extraordinary to think that for about 8 years it didn't go above $30.
In my opinion, starting from 1998, technology was developing at great speeds. This required a lot of oil, of course.
Also, US invasions into the Middle East didn't help the price to stay low. Once the biggest oil rigs were under control of the US, it was in their interest to drive the price up. The ride up was quite good. I remember those insane (at that time) levels of $50, $70, $90, $110, $130 and $140 per barrel. I remember that analysts were shouting: "Oh my God, we're going to hit $200!". Of course, $200 never happened. And I am wondering if we ever will, because of the way technology is shaping up today and how the appetite for alternative fuel is growing. But let's not guess, let's not rush it there. Let's enjoy our lives right now, but be cautious about mother Earth's oil supplies.
I remember I was trading WTI in 2012 around the $100-$110 level and I was thinking that THAT was the new bottom in that commodity, due to the recent higher levels and the way it flew there. I couldn't believe that in 2016 the price will drop to such a low level, or should I say, back to the '90ies level. Of course, it didn't stay there for too long and quickly moved to the $40s and $50s levels. Now some would say that maybe this is the new bottom and we are ready to pop back up. Maybe it's just me, but I am a bit skeptical about WTI popping back up... for now... I think it could surprise us by giving a last good drop in the price, before shooting back up.
The reason for that would be beautiful textbook formations, like a Bearish Flag, a Double Bottom and this little Head-and-Shoulders that you can see forming from the beginning of 2016 and now. And the Markets must respect that, otherwise everybody will just stop trading and just hit the casinos, because it will become the same, or casinos will be even more fun, because you can at least get a free tea or coffee in there. There will be no logic in the Markets. I'm not saying that there is a lot of it now, but then you might as well just go bet on sports. At least in football you will have a 33% chance of winning (1st team, draw or 2nd team). Or even better, a 66% chance if you bet on a team to win or draw. I understand that Fundamentalists would argue a lot with me, but hey, we all have opinions.
That is why I call it "The Beautiful ch-ART". Because it can tell about the historic developments and why certain things happened in history. And why "ART"? Probably because I'm an idiot who likes the markets and their charts, which sometimes could look like a work of art. At least for me.
As always, guys... keep an eye on the price action!
