econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 08 December 2016

Crude Oil Prices: "Random"? Hardly. The More Emotional The Market, The More Predictable It Is.

from Elliott Wave International

Last week's shocking spike in crude oil prices is +12% and counting, the biggest one-week gain in five years. Media stories blame one culprit: the November 30 OPEC agreement to cut production.

In absolute terms, the agreed-to cut is small: 1.2 million barrels a day, less than 2% of daily global oil production. Given the existing supply glut, that's a drop in the bucket (no pun intended). Yet, it was a bigger cut than the market expected; plus, the fact that OPEC members came to an agreement at all was enough to play a role in soaring prices.

The weeks leading up to the meeting were filled with anticipation and emotion. Oil prices went all over the place -- down 4% one day, 3% the next. Yet, those fluctuations weren't random.

The more emotional the markets get, the more influential the collective psychology of the market players becomes. That's why Elliott wave price patterns often get particularly clear when volatility strikes.

See for yourself. Below are excerpts from the forecasts our Energy Pro Service, edited by the veteran oil market analyst Steve Craig, posted for subscribers starting in mid-November.

November 15

-- Today's pop above 45.95 leads me to believe that wave A ended at Monday's 42.20 sell-off low. Trade below 45.28 would offer an aggressive hint that wave ((a)) is complete and I'll be looking for downside follow through...

November 18

-- Crude extended its slide from Thursday's 46.58 rebound high down to 44.55 and is attempting to reverse. ...trade above 46.58 should be a good sign that it marks an interim bottom and that the next leg of the advance is underway.

November 22

-- Searching for a top (49.20?). Crude extended its advance up to 49.20. The price action gives wave ((c)) enough legs to count it and the countertrend advance as complete.

November 25

-- A bearish stance seems warranted. Crude remains under selling pressure... The next big hurdle to cross is January's 45.18 wave ((b)) low. Ideally, resistance at 48.26 will hold.

November 28

-- Bearish against 49.20. WTI extended its decline to 45.14 ... if wave B has ended, the rally from 45.14 will prove corrective and set the stage for further decline.

The next day, November 29, oil prices indeed fell...

...and the day after, OPEC agreed to cut production. Oil prices soared, taking out the key resistance level at $47.65 you see circled in red in the chart above -- and, for the first time in weeks, negating our forecast.

This brief history shows that, while crude oil price gyrations may seem random and unpredictable, they are anything but.

It also shows you that even when an Elliott wave forecast doesn't work out, you almost always have a "line in the sand" which, if breached, tells you it's time to get out (e.g., $47.65 in the chart above).

And here's another interesting piece of information. Says CNBC:

"Since 1998, OPEC has cut production 15 times.

"A week later, U.S. crude rose 60 percent of the time...

"...But a month after cuts, U.S. crude was down 53 percent of the time."

We'll see in a few weeks if the second part of this pattern plays out.


Learn to Apply the Wave Principle to Your Markets

The Elliott Wave Basic Tutorial gives you the foundation you need to start using the Wave Principle to improve your trading and investing. You'll learn:

  • The basic Elliott wave patterns
  • Difference between impulsive and corrective waves
  • How to estimate the length of waves
  • How Fibonacci numbers fit into wave analysis
  • Tips for applying the method to your charts

Get instant access

This article was syndicated by Elliott Wave International and was originally published under the headline Crude Oil Prices: "Random"? Hardly..

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
The Job Guarantee, Wage-Price Inflation And Alternative Solutions: Part 2
The Job Guarantee, Wage-Price Inflation And Alternative Solutions: Part 1
News Blog
March 2017 Kansas City Fed Manufacturing At Highest Level Since March 2011
February 2017 Headline New Home Sales Improve and Above Expectations
18 March 2017 Initial Unemployment Claims Rolling Average Again Worsens
Get Around Baggage Check Fees With This Luggage Jacket
What Prompted The Electronic Devices Ban
Infographic Of The Day: The History Of Money Explained In One Infographic
Early Headlines: Asia Stocks Mixed, Oil, Dollar Up, Gold Down, Health Care Bill Fighting For Life, UK Car Mfg Hits 17-Yr High, UBS Charges 0.6% Int. On Deposits, China Debt Risks And More
Documentary Of The Week: Lee Harvey Oswald And The Call To Raleigh
Dallas 'Dirkules' Goes Past 30,000 Points
Number Of Migrant Deaths 2016 Highest Ever Recorded
Astronomers To Peer Into A Black Hole For First Time With New Event Horizon Telescope
The U.S. Spends More On Defense Than All Other NATO Members Combined
What We Read Today 22 March 2017
Investing Blog
Brother, Can You Spare A Bitcoin?
Bull Market Still Intact ... For Now
Opinion Blog
A New Agenda Will Win In France
After 75 Years, Isaac Asimov's Three Laws Of Robotics Need Updating
Precious Metals Blog
These Gold Stocks Will Produce Much Bigger Gains Than Gold Itself
Live Markets
23Mar2017 Pre-Market Commentary: Major Global Markets Are In The Green
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government































 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved