Elliott Wave Analysis of Crude Oil 6 July 2010

I will be addressing the Reuters Global Oil Forum this morning at 8.45 London time, and presenting my Elliott Wave Analysis of Crude oil. As many of you won’t have access to that platform, I am posting the charts here. These were prepared late yesterday evening (when oil was trading at 72.36).

My baseline case remains that we get a move down to around $60. However, the path to that is likely to be perilous. There are some persuasive reasons why we should expect a lot of choppy action. Even as I am writing this, Oil has already been to the first target I have mentioned in the chart and recovered smartly. This only reinforces my view that many traders are going to lose money in the next few weeks. They are going to get bullish near the top and bearish near the bottom.  While Elliott Wave analysis gives you a road map, you cannot expect it to produce a rabbit out of the hat every time! ( If you want to read about the magic of Elliott Wave Analysis, there is a link at the top of this page. But even my most recent update on GBP/USD looks magical in retrospect). Coming back to Crude Oil, beware of a move back to 76 before a big move down. However,  there is going to be a lot of blood letting before we reach our targets.


  • Bilal Khan

    Hi Ramki,

    Can you give your view on Pakistan’s KSE-100. I cant find a email for you as I would like to share my wave counts with you.

    Would really appreciate it if you could an EW count on the KSE-100

    • Hi Bilal, 8038 was top of 1, wave 2 down by 38.2% to 6812, wave 3=wave 1 at 9978. Wave 4 down by 38.2% to 8684 and wave 5 finished at 10731. having completed a 5 wave rally, it needs to be corrected by a 3 step down move, the first of which was over at 9131 as wave A. We are now in wave B. Later on we will see a downmove to 8685 as wave c.

  • L1ctin

    Hi Mr.Ramki, sorry to post this question here. Bp reached 360 and higher, can the recent strenght push it to 402 (the 38.2 retrec of the 3rd wave)? And the second question: the move to 310 was completed very fast..under 1 month, how long will it take for the move down to 210 to complete?

    Best Regards,

  • Hi Lucian, Unfortunately I don’t have the charts where I am for the next 3 days. I am comfortable with selling in stages, rather than all at once. We know the up move is on the hope of bringing in fresh investors to ensure the survival of the company. But bear in mind that will be diluting the shares of existing investors. Technically, we will at least geat another test of the 310 low. So sell small amounts in stages, and add on the way down more aggressively. Re time frame, the correction down will last until Jan 2011. So your positions need to expire end Jan if you know what I mean. That gives enough time for reality to sink in.

  • Saleh

    Hi Ramki,

    Thank you for the wave numbering of the light crude oil.

    I have two questions:

    1- Referring to the daily chart, what is the wave number of the bottom of Jan-09? Also, what would be the wave # of the all-time high “147”?

    2- In the hourly chart you wave 2 ended after a triangle pattern, which is unusual! do you consider this situation as rare or common?



    • Hi Saleh, When I encounter a wave of such dimension as that which reached a historical high at 147, I am quite happy to call the ensuing correction right. What matters is whether one has made money, not whether he called a super cycle correctly. Re the triangle, I could have labeled that wave differently and still come to more or less the same conclusion. Getting the direction right is more important. Triangles are rare in wave 2, but have occurred often enough in my experience.

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