Crude Oil
Recently, I came across a post in my social media thread where someone was loudly proclaiming that crude was going to $55.00. So I thought I’d better check that out, because, as we know, prediction is difficult, particularly about the future.
The chart below is a weekly chart of crude because I always start with a 1,000-foot view. I fail to understand why traders jam themselves up against price being buffeted by every single noise generated perturbation and think that this gives them some form of insight.
Trading lesson for Easter Sunday – the long-term trend is the final arbiter of where the price may go. Five minutes charts are meaningless.
*Right click on the chart and select open in a new tab for a full-sized view.
Two points are obvious: my long-term trend is bearish, and the price has broken through long-term support but hasn’t followed through. This lack of follow through was somewhat of a surprise, as I had assumed that a breach of such long-term support would trigger a cascade of moves downward. But last week was a recovery week that my short-term system picked up. But because I honour the long-term trend, I couldn’t take these countertrend moves.
So, where does this put our pundit’s prediction about crude at $55.00? It places it in the realm of all other predictions. It’s a guess, and guesses are cheap.
What I see is the price banging against support and resistance, and until that situation changes, there’s nothing to be done.
Remember, patience is free.
