The price of crude oil recently climbed to 52.20 dollars a barrel, but has been declining ever since. Currently, the black gold is trading around $49.40 after declining to as low as $48.85 earlier this week. Apparently, anticipating the future is not an easy task. It remains unknown, no matter how accurate your forecasting method is. However, even when the situation is not quite clear, traders could still do better if they have an idea of what to expect. That is why trust the Elliott Wave Principle to guide us in the markets.
Before the markets opened on Monday, October 17th, we sent our premium clients their crude oil analysis, which included several charts – weekly, daily and hourly. One of them is shown below.(some of the marks have been removed for this article)
This was one of the two probable scenarios. The other did not even include a new high in wave (v), so we suggested that “even if the market chooses this bullish scenario, now is still not a good time to join the bulls, because a pullback is likely to occur soon.” We thought so, because according to the Wave Principle, every impulse is followed by a correction in the opposite direction. The chart below shows how things went.
When the forecast was made, the price of crude oil was at a crossroads. It could have gone both up and down. In such cases, we always recommend staying aside, because not losing money is just as important as earning it. Perhaps even more important. But as soon as wave (v) took out the top of wave (iii), our subscribers knew this was most likely to be a fake breakout and a bearish reversal could be expected. Even when it is better to abstain from trading, Elliott Wave analysis still allows you to understand the price behavior. Needless to say, this could be an extremely valuable advantage, when the moment to take action eventually arrives.
What to expect from now on? What is the bigger picture saying? Is crude oil going to continue even lower or the support near 48.80 would turn out to be too strong for the bears 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.