The price of WTI crude oil plunged from $53.74 to as low as $43.73 between April 12th and May 5th. This 10-dollar sell-off surely made the bears feel almighty, but instead of accelerating to the south, oil prices bounced up to close the week at $46.46. Before the market open the next Monday, May 8th, we sent our clients their Elliott Wave analyses, which include several charts and plenty of explanations. One of the charts our crude oil subscribers received is shown below.(some marks have been removed for this article)
The sharp leap from $43.73 plus the wave structure of the preceding crash suggested the recovery was likely to continue towards the resistance area of $49 a barrel, at least. So we did not want to short crude oil right away, because the bulls seemed determined to lift the price higher. Eight days later, the price is hovering around $49.00, after reaching $49.63 yesterday.
Mainstream media is using the production cuts agreement between Russia and Saudi Arabia, announced yesterday, as an explanation for the surge. The Elliott Wave principle, on the other hand, successfully prepared us for it a week ago. The question is, if oil soared before the cuts announcement, could it fall now, in anticipation of something else to happen?