The price of crude oil recorded its biggest daily decline in four years Thursday after President Trump threatened to impose new tariffs on $300 billion worth of Chinese goods.
The U.S.-China trade war has been unfolding during most of Trump’s presidency. With the 2020 elections approaching, many thought a trade deal might be in the making. Those hopes were shattered on August 1st by the President’s latest tweetstorm. As a result, WTI crude oil prices fell 7.6% yesterday, plunging sharply from roughly $58 to under $53.60.
Fortunately, this doesn’t mean traders must follow Trump’s every step to stay ahead. Contrary to popular belief, we don’t think the markets are totally at the mercy of the President. In fact, the crude oil chart below was sent to our subscribers early on Wednesday, July 31st, over 24 hours before Trump’s latest tariff threat.

Instead of trying to predict what the most unpredictable President in US history was going to say, we turned to the Elliott Wave principle for guidance.
Crude oil’s hourly chart revealed that the decline from $60.91 to $54.71 was a five-wave impulse. Labeled i-ii-iii-iv-v, this pattern indicated the direction of the larger sequence. The following rally looked like a simple a-b-c zigzag with a triangle in wave b-orange.
Crude Oil and the Difference Between a Cause and a Catalyst
Above $58 a barrel, the price was already knocking on the 61.8% Fibonacci level, where corrective waves often terminate. According to the theory, the trend was supposed to resume in the direction of the impulsive pattern. Hence, it made sense to expect another selloff towards the $54 mark. The updated chart below illustrates what you already know.

We cannot prove it, but in our opinion, if it wasn’t for Trump, something else was going to send crude oil prices down. Between $58 and $59 a barrel, the bearish Elliott Wave cycle was complete. The stage was set and the bears were only waiting for an excuse. A single spark would have probably been enough. Trump threw a bomb instead.
So the next time you find yourself worrying how the markets may react to what someone is going to say, don’t forget to check the charts. The signs might be there already.
What will WTI Crude Oil bring next? That is the subject of discussion in our latest premium analysis! Order and receive TODAY!