by Erik McCurdy, Prometheus Market Insight
Oil has experienced a true market crash, declining 47 percent following the peak in June. However, the downtrend is declining at an unsustainable rate and the market has become extremely oversold across intermediate-term and short-term time frames. As a result, the decline will almost certainly be followed by a violent oversold reaction, and the large intraweek rebound that occurred last week suggests that the reaction may be imminent.
Additionally, we are 32 weeks into the weekly cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending May 9 and the latest ITCL is imminent. The intraweek rebound last week suggests that the impending ITCL may have formed this week. A strong advance next week would confirm that the latest intermediate-term low is in place and forecast at least several weeks of strength.
From a short-term perspective, the latest short-term cycle low (STCL) formed early last week.
Looking ahead, a strong alpha phase or beta phase rally that approaches the last beta high (BH) at 69.31 would signal the likely transition to a bullish short-term translation and indicate that the intermediate-term low is in place. Therefore, it will be important to monitor oil market behavior closely during the next several sessions.
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