Crude oil’s December futures contract just climbed to 47.37 dollars a barrel in what is supposed to be a rally, inspired by hopes that OPEC members are going to agree to cut production in an attempt to lift oil prices. The market is probably the only place, where such an irrational thing as “hope” could have a real impact, regardless of the fact that such an agreement may or may not be reached in the end. Truth is that hope could only be used as an explanation for oil’s rally, but its appearance cannot be predicted prior to it. The price surge itself, however, could be predicted by using the Elliott Wave Principle. The chart below, which was sent to premium clients before the open on November 14th, proves it.(some marks have been removed for this article)
As visible, a week ago, our Elliott Wave analysis suggested the price of crude oil was unlikely to continue declining and was supposed to reverse to the upside instead. The count itself was supported by the relative strength index as well, which was showing a bullish divergence between the last three lows. We did not need to rely on “hopes” to lift the prices, because the market’s intentions were already made visible on the charts. All we had to do is read them carefully.
Which we did. Once again, the Wave principle proved its ability to help analysts correctly anticipate price reversals. Meanwhile, all the majority of market participants could do is wait for the news and hope that OPEC members will decide in their position’s favor. With Elliott Wave analysis on your side, this does not need to be your approach. Because what if hopes do not materialize this time?
What to expect from now on? What is the bigger picture saying? Is crude oil going to continue even higher or the resistance near 47.40 would turn out to be too strong for the bulls to breach? Prepare yourself for whatever is coming. Order your Elliott Wave analysis due out on Monday at our Premium Forecasts section. Stay ahead of the news in any market with the Elliott Wave principle.