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I’ve had a solid handle on this crude move for a few months now, but I’ve got to admit, this most recent action is a little baffling. Crude is acting somewhat suspiciously as it’s not conforming to any recognizable Cycle ending expectations. That’s because after a prolonged decline, whenever crude prints a Cycle Low, it almost always bounces out with vigor and authority.
With the most recent (5-7 days) action, we notice that our tracking oscillators have turned higher and crude has broken the trend-line, both of these are what you expect in a new Cycle. So these should be bullish for crude, considering they’re occurring in the timing bands for a DCL and ICL. But, there is little strength to be seen, so the indicators are not being confirmed by any positive price action. One could argue the divergence is a sign of price strength to come, but in my experience with crude, it’s the price confirmation that comes first.
This leads me to believe that further downside could be coming, especially since the long 10 week decline remains the most dominant trend. In addition, these sideways consolidations are typically continuation (lower) patterns of the recent trend. So in keeping with my consistent theme of these past few weeks, until we see positive upside price action (close above $95.38), I continue to favor the downside possibilities.
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