Last time, we showed you how Elliott Wave analysis put us ahead of WTI crude oil ‘s 10% decline from ~$79 to ~$71 a barrel. Today, you’ll see how it warned us not to trust the following sharp recovery to over $77 either. It wasn’t about geopolitics or the economic policies of US presidential candidates. The chart below, included in our Wednesday Elliott Wave Pro update published on August 28th, was enough to make the prediction that crude oil prices were going much lower.
This is the reason why we remained bearish on crude oil even after it jumped sharply from the low $70s to over $77.50. We thought it stood for wave (ii) of 3 of the much larger decline our bigger picture analysis had already prepared us for. This allowed us to identify $80.15 as the invalidation level for this count. The bears would continue to have the upper hand as long as the price stayed below it.
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And indeed, $80.15 was never threatened. Over the following two weeks, the price of WTI crude oil fell by over $10 to just above $65 a barrel. This crash can be explained post-factum with demand and recession worries or with Libya’s supply recovery. No matter how you slice it, however, Elliott Wave analysis managed to predict it in advance.
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