Crude Oil was timidly trying to recover in the beginning of March, after falling to as low as 26.03 a month earlier. Just 3 months later, in June, it nearly doubled, reaching the vicinity of 51.60 dollars a barrel. Most bears were probably feeling too enthusiastic about the downtrend, which has been in progress for about two years, and did not see that rally coming. After all, how could you allow to think that a 100% recovery is underway after such a violent sell-off?
Here is how. On March 7th, 2016, our premium clients received the following chart of crude oil futures.(some of the marks have been removed for this article)
When we sent that forecast, the price of oil was slightly below 36.30. The daily chart was suggesting that if 37.75 was breached by the bulls, the advance was likely to continue much higher. “…it is likely to go for the area between $48 and $50” was what we wrote our premium clients. We admit this count was not our primary one, but that is what confirmation levels are for – to confirm one count over the other. So when 37.75 gave up, we switched to the above-shown alternative count. And it paid off.
If it was not for the specific confirmation level, provided by the Elliott Wave Principle, we would probably still be waiting for crude oil prices to fall. Instead, by hitting 37.75, the market told us it was time to change our mind and take advantage of the new circumstances. Because, as John Hill says, the mistake is not being wrong, the mistake is staying wrong. One of the Wave principle’s most valuable abilities is to tell traders when they are wrong, by providing specific price levels, which, if broken would invalidate one count and confirm another. It helped us a lot back in March.