The price of crude oil has been marching upward since early June, when it bottomed at $50.59. By July 11th, a barrel cost $60.91. Unfortunately for the bulls, the rally came to a halt after Secretary of State Mike Pompeo stated Iran was willing to negotiate on its ballistic missile program.
To the oil market, always with one ear in the Middle East, this meant a reduction in tensions. WTI crude oil prices responded by falling 7.7% to $56.20 on July 17th. Does this mean you too should be on high alert for everything related to the Middle East all the time?
Not at all. The news is startling only to those unaware of the Elliott Wave patterns. We believe crude oil prices were on the verge of collapse anyway. And the chart below can prove it.
This hourly chart of WTI crude oil was sent to our subscribers as a mid-week update on Wednesday, July 10th. Back then we thought the recovery from $50.59 was a five-wave impulse in progress. As visible, the pattern’s fifth wave was incomplete, so it made sense to expect a new high near $61.
On the other hand, the Wave principle states that a three-wave correction follows every impulse. This implied that once wave v was over, a notable bearish reversal for the start of wave b can be expected. Wave b was supposed to erase all of the fifth wave’s gains and drag crude oil prices back to the support of wave iv.
Crude Oil Poised to Fall. No Catalyst in Sight
At the time there was no way to know what exactly would trigger the selloff. U.S.-Iran tensions were still on the rise and it appeared there was no reason to expect a decline any time soon. Yet, there was a clear Elliott Wave pattern suggesting otherwise. Then this happened:
Wave v exceeded the top of wave iii and reached $60.91 on July 11th. Secretary Mike Pompeo made his Iran comments five days later – on Tuesday, July 16th. This means crude oil was already on its way to the downside by the time Pompeo delivered his remarks.
Therefore, he cannot be the reason for the plunge. The stage for a decline in the price of crude oil was already set. All Pompeo did was provide the catalyst. To someone totally unaware of the US-Iran situation, the oil market was simply following its Elliott Wave path.
What will WTI Crude Oil bring next? That is the subject of discussion in our latest premium analysis! Order and receive TODAY!
