Yesterday, March 24th, crude oil fell to 38.32 a barrel and people were rushing to offer an explanation for the weakness. Some said that the reason behind the slump is the mounting U.S. stockpiles. Other suggested it is the strong dollar. Iran and Libya’s refusal to join OPEC’s output freeze agreement was also among the many reasons analysts pointed out to explain oil’s plunge. We are not going to offer another explanation. In our opinion, trying to do so is meaningless, because the decline is already behind us. To us, being able to prepare for the move before it happens is far more important than looking for its cause afterwards. Fortunately, we can rely on the Elliott Wave Principle to help us with the task. The chart below, which was sent to our premium clients on Monday, March 21st, proves the Wave principle’s ability to prepare traders for what is coming before the majority of market participants has any idea.(some of the marks have been removed for this article)
As visible, the 15-min chart of crude oil made us expect a decline to at least 38.36. In addition, the odds of the top at 42.47 being broken were relatively small, so this level was excellent for stop-loss orders. In other words, as long as 42.47 was safe, the bears were supposed to aim at the 38-dollar mark. The week is almost over. Today is Friday and it is time to see how the situation has been developing during the last five days.
The price of crude oil hovered around the confirmation level for a while. However, the invalidation level was never threatened, so the count was still valid. On Tuesday, March 22nd, the bulls finally gave up trying and the decline we have been waiting for began. As it turned out, the waiting was worth it, since crude oil reached our first target on Thursday.
Crude oil gave us another great example of the fact that traders can make accurate forecasts by using nothing more than a chart. No stockpiles, no strong dollar, no OPEC. Just the Elliott Wave principle and your analytical skills. The theory enables you to stay ahead of the news, but what is probably even more important – it tells you when you are wrong by providing specific price levels to guide you in the market’s uncertain environment.
What to expect from now on? What is the bigger picture saying? Is crude oil going to continue even lower or the support near 38.30 would turn out to be too strong for the bears to breach? Prepare yourself for whatever is coming. Order your on demand Elliott Wave analysis now or pre-order the one due out next Monday at our Premium Forecasts section. Stay ahead of the news in any market with the Elliott Wave principle.