Medium Term Outlook for Crude Oil using Elliott Wave Analysis

 

Many of you will remember that I had called for a sell-off in the price of Crude Oil from the $140 level to $50 in 2008. (see old posts in Wavetimes, especially how Fifth wave extensions can make you rich!). The main reason for my bearish call at that time was we had completed an extended 5th wave at $147. You are now seeing another such ‘magical moment’ when yet another extended 5th wave has been completed at $114.83. The new target for Oil is now just below $71, which means there is another 26% downside left.

As I never tire of repeating, nothing works like Elliott Wave analysis when it comes to the markets. The trouble is, one has to be alert to recognize the patterns as it is happening. For example, I could have warned you of the top if I was watching it every day. Still, it is not too late even here. If Crude gets back to above 104, we would have missed only about $10 of the move. There is still about $25 left even from current levels!

Is it possible that I am wrong? Of course, I could be wrong. But we are working with stops, aren’t we? If you can afford a stop of $3 and make $30 in the bargain, I call that a fair risk-to-reward ratio! In case you are thinking of taking a short position in Oil, I urge you to do the selling in stages. 104.30-70 is one level, but we also have 107 as the 61.8% pull back level. By leaving some room to add there you will be doing yourself a favor should the market decide to turn choppy. But the best way to add to your first position is when it starts moving in your favor. You might not catch the top doing that, but at least you would be trading with the trend! Good luck.

By the way, you can get some of these alerts via twitter, in case you haven’t noticed. Once you sign up, you can share with your friends easily.

Update on 29 August 2019:

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