Photographer: Phil Weymouth/Bloomberg
The counter trend rally likely terminated on Friday. The weekly cycle topped on the 15th, and there is a projected turning point on the 18th. In the last year, four of five sell signals have been accurate. The weekly rhythm has joined its monthly counterpart on the downside. Hedgers are selling oil, a confirmation of a top. The retracement rally targets to the upside have been reached and crude closed at the 38.2% retracement level. With both cycles pointing down, the price decline is likely to resume to at least $23. The monthly cycle still points down into November with price targets of $17 and $11.
There is no change in these bearish factors:
- The monthly cycle points down
- The monthly bar graph gave a hook sell signal in January. It last occurred at a major high in July 2008 leading to a bear market. Oil fell by 66% over the next 6 months
- Downtrends in commodities tend to persist
- Oil has tended to decline during flu outbreaks.
Oil Weekly Cycle
Buy and sell signals have been successful 80% of the time in the last year.
Cycles Research Invetments LLC Source