LONG OIL $35 - $40

18 Apr 2020

Elliot Wave Structures - Daily and Hourly
-Bears have run out of room, they are set for a major squeeze - well structured Elliot Wave rally on the Daily
-wave 3, is 2.618 extension of wave 1
-wave 4 is 0.5 of wave 2
-wave 5 is 0.5 of wave 1

-Also, worth noting is that the conclusion of this Elliot wave cycle on the daily, there is an overlapping Elliot wave ending its wave 5 on the hourly, structured on the sell off since 9 April peak

Long-term - Optimism vs. Pessimism Market Convergence Theory
-End of Elliot Wave upcoming - Elliot wave 1 initiated during January sell off - hence, no denying that oil pessimism is tied to Covid-19 speculation; when compared to the optimism in US indices I think there is going to be a convergence with oil rallying and equities crashing - after convergence, I would lean bearish, and expect to see SP 500 crash to 1800-2000, and then oil re-test lows - after which equities will gradually return to highs and oil will test the top of the descending triangle

Bonus Tip
-never listen to the news, only to the market

18 Apr 2020

Catatan

Some further description of my view,

I am not very bullish on oil long-term, but it is one of the world's most openly manipulated markets, and hundreds of millions of people's livelihoods are tied to the price of oil. The economic disaster of sustained low oil prices would completely de-stabilize the world. Too many economies have grown dependent on its revenue, so people rooting for oil to collapse is an extremely pessimistic view. And keep in mind, this is during a period where governments are spending unprecedented amounts of money, so that oil revenue is extremely necessary. Hence, oil below $30-$40 just isn't sustainable.

Oil companies will go bankrupt, production cuts will occur, tariffs can be raised, there is a massive arsenal of weapons ready to bring oil back up. So people consumed by single digit oil prices are going to get slapped in the face by political economy 101. Until oil-dependent countries can diversify their revenues further the market will continue to be manipulated and market forces will continue to lower supply.

Also worth referencing is Saudi Arabia's strategy. You can read articles on oil price .com and get the impression that Saudi Arabia doesn't know what they are doing. First off, we are talking about the only place in the world where their rulers have managed to retain their medieval structure into the 21st century. These people are not dumb!

For instance, why is Saudi Arabia buying oil equities specifically? Think about. Shouldn't they be diversifying their economy? This gives an impression they are dumb because they seem to be using their diversification fund to double down on oil. Sounds like they are dumb right, short oil right? WRONG.

What market do they control and manipulate? Oh that is right it is oil. Saudi Arabia is setting itself up for the biggest pump and dump on a massive scale. Scoop up all the cheap equities, then announce massive production cuts so that those equities sky rocket in value. Once you reach a technical pivot point, dump the equities and bring your competition back to the bring of bankruptcy. Now the western governments will be under pressure to bail out those companies. If they do, then Saudi Arabia effectively stole money right from the pockets of western Governments and any trader foolish enough to buy it and hold long.

In a matter of months, the Saudi Arabia diversification fund could be double or triple the size. Enough to see through the development of their smart city, or perhaps two, all the while, weakening their competition.

Saudi Arabia has ONE major form of leverage, their ability to manipulate the oil market. They are going to use it because its all they got.

I hope this has been enlightening, and welcome any criticism to be enlightened myself.

20 Apr 2020

Catatan

Hammer on the hourly view, parabolic move down, and bollinger band puncture are all great signals for a bottom. This also perfectly coincides with the end of wave 5 in the Elliot Wave pattern since the sell off from the 60s. On the hourly Elliot wave move I mentioned, this would coincide with wave 3 being a 2.618 extension of wave 1 rather than 1.618.

Also worth noting is that the end of the wave usually coincides with great acceleration and is mostly driven by traders, which in terms of how this trading is going coincides closely.

As far as I see, this is the best signal for a bottom one could hope for. Sustained low oil prices = an assured Great Depression. How could policy makers allow such a thing to happen? In the U.S., over 5% of employment is tied to oil & gas. Would Trump really turn his back on his supporters during an election year? Personally, I think he likes to win too much to do that.

27 Mei 2020

Catatan

Wow, pattern totally worked, except for the quick drop off to -$40...