OIL

Oct 052008

Oil to edge slightly lower

The technical target for oil is in the low $86s. That level also is not far from the 61.8% correction of the

rally from 49.90 to 147.27. Once we reach the low 87s, you should be wary of some serious short-

covering. That buying could take the commodity back towards 103 or even higher. In the big picture, we

will be looking for Oil to come off to much lower levels, but now is not the time to be shorting Oil. We

will take this one step at a time. Study the attached chart carefully, oil-5-oct-08, and compare to the

SNP500 post in the Featured Articles section. Ramki

May 122010

Elliott Wave Analysis of Light Crude Oil

Here is a chart of Light Crude oil that I prepared yesterday for a Reuters presentation. As you can see

from the elliott wave analysis and labels marked on the chart, I expect a slight recovery from the mid

75s , but eventually we should be prepared for a move lower to $65 or even to just under $60 in the

coming days/weeks.

May 242010

Elliott Wave Analysis of Crude Oil 24 May

2010

In just a matter of 9 days Crude Oil has moved over 15%. Now tell me if there is any finance manager

who wishes to hedge his exposures would not be happy to have such intelligence! Elliott Wave Analysis

is powerful if you know how to use it. A recovery to $73 is likley, and a move to 75.30 is also possible.

Traders should wait for the higher level (at least near 75) before considering any shorts. Hedgers of

courtse should be more proactive. They should start covering in stages from 73 onwards, because the

downmove is far from over!

Jul 062010

Elliott Wave Analysis of Crude Oil 6 July

2010

I will be addressing the Reuters Global Oil Forum this morning at 8.45 London time, and

presenting my Elliott Wave Analysis of Crude oil. As many of you won‟t have access to that

platform, I am posting the charts here. These were prepared late yesterday evening (when oil was

trading at 72.36).

My baseline case remains that we get a move down to around $60. However, the path to that is

likely to be perilous. There are some persuasive reasons why we should expect a lot of choppy

action. Even as I am writing this, Oil has already been to the first target I have mentioned in the

chart and recovered smartly. This only reinforces my view that many traders are going to lose

money in the next few weeks. They are going to get bullish near the top and bearish near the

bottom. While Elliott Wave analysis gives you a road map, you cannot expect it to produce a

rabbit out of the hat every time! ( If you want to read about the magic of Elliott Wave Analysis,

there is a link at the top of this page. But even my most recent update on GBP/USD looks

magical in retrospect). Coming back to Crude Oil, beware of a move back to 76 before a big

move down. However, there is going to be a lot of blood letting before we reach our targets.

Jul 132010

Crude Oil – Elliott Wave Analysis 14 July

2010

When dealing with financial markets, you should always be ready to change your mind about the

framework on which you are basing your analysis. If everything was laid out cut and dried, there

won‟t be a market because everyone would know what is going to happen. Take the case of

crude oil.

In my Elliott wave analysis of oil presented to you on 6th July, I used an hourly chart to project

as far as possible about the likely moves. I suggest that you print the chart attached to that

update and view it alongside the chart of today. You will see that in terms of the waves, I am

continuing to be faithful to the original version, because the twists and turns have happened

exactly as anticipated. However, when we reached $76, instead of coming down directly to $60,

the price went only to around 74.25 and has since traded higher again. You should understand

that Hourly charts are useful only to a limited extent. There are too many factors that impact the

market. It is wonderful that we got so many good moves using the hourly chart. The bigger

picture still calls for a large sized down move in Oil. We will attempt to pin point the top as we

approach it. Till that time, you are on your own, because I am currently updating the blog less

frequently than previously. Good luck.

May 082011

Medium Term Outlook for Crude Oil using

Elliott Wave Analysis

Many of you will remember that I had called for a sell-off in the price of Crude Oil from the

$140 level to $50 in 2008. (see old posts in Wavetimes, especially how Fifth wave extensions

can make you rich!). The main reason for my bearish call at that time was we had completed an

extended 5th wave at $147. You are now seeing another such „magical moment‟ when yet

another extended 5th wave has been completed at $114.83. The new target for Oil is now just

below $71, which means there is another 26% downside left.

As I never tire of repeating, nothing works like Elliott Wave analysis when it comes to the

markets. The trouble is, one has to be alert to recognize the patterns as it is happening. For

example, I could have warned you of the top if I was watching it every day. Still, it is not too late

even here. If Crude gets back to above 104, we would have missed only about $10 of the move.

There is still about $25 left even from current levels!

Is it possible that I am wrong? Of course, I could be wrong. But we are working with stops,

aren‟t we? If you can afford a stop of $3 and make $30 in the bargain, I call that a fair risk-to-

reward ratio! In case you are thinking of taking a short position in Oil, I urge you to do the

selling in stages. 104.30-70 is one level, but we also have 107 as the 61.8% pull back level. By

leaving some room to add there you will be doing yourself a favor should the market decide to

turn choppy. But the best way to add to your first position is when it starts moving in your favor.

You might not catch the top doing that, but at least you would be trading with the trend! Good

luck.

By the way, you can get some of these alerts via twitter, in case you haven‟t noticed. Once you

sign up, you can share with your friends easily.

May 262011

Crude Oil Outlook

On 15th May, I prepared the first chart for a friend of mine in the Far East. The important point

to note is this was done before Goldman Sachs came out with a bullish call on Oil. The set-up

was right, and the moment that news hit the market, prices started going up. This is the way

things usually work. There will be a catalyst, and the move will materialize! However, once the

catalyst wears off, or as fresh news comes to the fore, the old fundamentals will reassert

themselves. The only tool we have is Elliott Wave Principle. Our count says Oil will go lower,

once this correction is finished. We should stick with the original view until the count is proved

wrong (by the violation of one or more rules of the Wave Principle, or by some guideline going

out of sync with the developing patterns).

I have said that we are in a correction. As you can see from the scond chart, this correction is

turning out to be a complex one, ie one where there are combinations of smaller patterns.

Complex corrections are notoriously unpredictable because they take all shapes and travel

distances that we cant anticipate. Yet, I have given one possible version here. What is more

important for most traders is the bigger direction, Is it down, or is it up? I still think we go lower.

Let us see.

Jun 212011

Crude Oil Outlook

I would like to share with you some charts that demonstrate how to use Elliott Wave Analysis in

the real world.

The first chart, dated June 9, (when Crude oil was at 101.18) shows a large triangle. As you

know, I have remained faithful to the bearish outlook throughout the recent weeks, even in the

face of bullish calls from other analysts. This in itself is an important lesson for some. It is

essential to stick to one count until proved wrong, or until fresh clues emerge.

In the second chart I have redrawn the triangle (and called it Wave B). The sell off that started

from point B has already completed 3 steps. If this is a C wave, we should see it complete the 4th

wave around 95.10-45 and come off as a fifth wave. We would also look for the 5th wave to

extend. However, if we see it trade above 96.10, then we will use any dip thereafter to exit shorts

and wait for better levels to reinstate.

Aug 152011

Crude Oil Outlook

Hello folks, It has been a busy few weeks as I was spending all my evenings putting together my

book. Almost done, now! Between, I noticed that Crude Oil came quite close to the target of $71.

Remember we have been bearish on this from the time it was around 110? (when some leading

investment banks were calling it to $150).

The outlook for Crude Oil in the near term is for a failure between 88.10 and 89.50 and come

down once again. Hopefully, this time we will reach the target of 71 levels. Stops should be

placed on two closes above 89.80 Take a look at the attached chart and stay tuned for the

announcement regarding the book!

Sep 082011

Elliott Wave Analysis of Crude Oil

A lot can happen in three weeks! In the Elliott Wave Analysis of Crude Oil posted on 15th

August, we anticipated that the price will rise to around 88.10-89.50 and then decline. We had

the $71 level in mind, (quite greedily I would say because Oil did come pretty close to achieving

that target earlier on, reaching below 76).

This time, though, the sell off stopped at 79.17, still a decent 11% down from where it had

topped.

The recovery from 79.17 sent out all kinds of clues to the Elliott Wave trader, (these have been

discussed in detail in my book “Five Waves to Financial Freedom”)

The key question now is what should we do here? My suggestion is you should stay on the

sidelines. If we get to the mid 94 levels, post me a note on WaveTimes and I will look at the

chart again. Will we get there? I am not able to say that at this point in time.

Nov 022011

Elliott Wave Analysis works very nicely in commodities. There is a lot of money to be made if

you can apply the techniques you learnt in Five Waves to Financial Freedom. Trouble is, even if

you learn the methods, you need to have the capital and the stomach to pull the trigger at the

right time, and more importantly, to stay with the trade until your sensible stops are done or your

profit levels are reached. This is a challenge that ranks at par with being good at analyzing the

markets.

Now without any further ado, let me present you with your favorite charts! Enjoy!

By the way, I am off on an exotic holiday to Cambodia tomorrow.

Best of luck in the meantime, and if the Forum goes live, you may start sharing your thoughts

and ideas with other members right away.

Dec 122011

Elliott Wave update on Crude Oil 12 Dec

2011

Crude Oil charts are showing tentative signs of fatigue after the run up from $74.95 to $103.37, a

move of almost 38%. I am anticipating a correction back to around the $91 levels, but we need to

be patient as there will likely be one more attempt higher first. Crude Oil traders need to keep a

close watch going forward to see if we first get a dip to around $97 followed by a move back

towards $103. If we get these moves, then the time to sell will be on any dip under $100 AFTER

reaching 103. Your stops can then be placed above the high seen. This way you will be able to

get an attractive risk-reward for the trade.

Elliott wave comments are given on the two charts you see here. As always, every update you

see in WaveTimes is an opportunity to learn and reinforce your understanding the Elliott Wave

Principle.

Jun 252012

Crude Oil Still Has Another 10% Price Drop

In The Well

In my recent interview with Forbes editor John Dobosz on Market Blaster, I promised to write

about the Elliott Wave outlook for crude oil when I returned from holidays. With this post I am

delivering on that promise. I should have written earlier, but the pressure of work plus all the

catching up that one needs to do on returning back after a long vacation took its toll.

The bottom line is that my work with Elliott Waves tells me to expect another 10% move lower

in crude oil prices from current near $79 on Monday. Here are my reasons.

Those of you who are familiar with my work on WaveTimes would know that some of the most

profitable trades come when you spot the end of an extended fifth wave. Elliott Wave theory

states that the extended fifth wave is often retraced twice, and this is what happened with crude

oil.

The first chart below shows how the move from $32.40 just after Christmas of 2008 to last year‟s

high of $114.83 developed in a clear five wave pattern. The internal waves were all related to

each other by Fibonacci ratios, with the fifth wave covering a distance of almost 100% of what

was seen from point 0 to point 3 in the chart. This wave is incredible because it is so textbook

like in its unraveling.

What comes next is even more exciting. We got a swift sell off, as called for by Elliott Wave

theory, and the first move down finished at $74.95. That is marked in the second chart below as

point “A.”

Next we got a steep rally to point “B,” nearly at the same height as the top of the fifth wave. This

rally confirmed my bearishness and the reasons are simple. First of all the recovery to point “B”

unfolded in three waves, as all corrections tend to do. Secondly, we know that the target for the

correction that follows an extended fifth wave is placed at the minor wave ii of the extended fifth

wave. This minor wave ii lies at $70.76 (which is about 10% down from current levels).

I would also draw your attention to the 50% retracement level of the prior uptrend that is placed

at $73.66. Expect some players to take profits on their shorts at that support level, but corporate

treasurers at airline companies looking to hedge future fuel requirements should consider

anything below $71 as good levels to get into structures that will pay off if crude prices get back

to $85 in the next few quarters.

Just a word of caution. This recommendation is for hedgers. If you are a trader, you need to be

more sensitive about where you enter, and how much you would exposure you get at different

levels. Keep in mind that crude‟s bounce could come from $70.51 instead of $70.76 because the

former level will be 100% equal in length to the measure of wave A (wave C = wave A at that

point), and as a trader you need to be aware of these additional points, for example.

You can play the plunge and eventual rise in crude oil with exchange traded funds. The U.S. Oil

Fund (USO), Teucrium WTI Crude Oil (CRUD), PowerShares DB Crude Oil Long ETN (OCO)

and the 2x leveraged ProShares Ultra DJ-UBS Crude Oil (UCO) get you long exposure to crude.

To play bear in this market, you have funds to choose from such as the PowerShares DB Crude

Oil Short ETN (SZO) as well as the inverse and leveraged PowerShares DB Crude Oil Double

Short ETN (DTO).

Finally, if you are interested in learning about how professionals use Elliott Wave analysis, I

would recommend that you consider taking a look at my book “Five Waves to Financial

Freedom.” Good luck!

Jun 262012

Elliott Wave Outlook for Brent Crude

The speed with which Brent crude oil sold off caught quite a few traders and hedgers off-guard,

leading them to wonder, “Can this really be happening?!”

In my nearly 30 years of dealing with the markets, I have seen one particular Elliott Wave signal

that works time and time again. And what is happening with Brent is just what that signal

anticipated.

According to the Elliott Wave Theory, when a five wave movement in a trend is completed, we

should expect a correction. However, when the fifth wave happens to be an extended wave (i.e. a

wave that traveled a relatively longer distance than is usual), we should sit up and take notice.

This is because such a move signals three things. First, the ensuing correction will be dramatic.

Second, the extended wave could experience what is known as a 'double retracement'. And third,

the sell off will have as its target a price level in the region of the minor wave 2 within the

extension.

Take a look at the chart below where I have labeled the five waves for your convenience. The

fifth wave is longer than wave 1 and wave 3, the other two 'impulse' waves in the sequence, and

has traveled a distance equal to 123.6% (a key ratio!) of the move from points 0 to 3.

.

Clearly, Brent crude oil seems to have followed the path anticipated by Elliott Wave Theory. As

you would have observed from the enlarged chart, my target for the down move lies at $79.92,

which is actually the top of the first wave of the extended fifth. However, if you are a treasurer of

a company that is exposed to oil price movements, I would recommend that you put on hedges

starting from the time when Brent approaches the $82.80 levels. If you are a trader, and are

running a short position, you too should start taking profits around these early supports.

There are a variety of ways you can express a bearish view from the current levels. For example,

you have funds to choose from such as the PowerShares DB Crude Oil Short ETN SZO -1.52%

as well as the inverse and leveraged PowerShares DB Crude Oil Double Short ETN DTO -

2.91% . If you are more aggressive, you will look at some stocks in the oil-related sector, and see

how they would be impacted by a lower oil price: Exxon Mobil Corporation XOM -0.08% ,

British Petroleum PLC BP -0.18% and Chevron Corporation CVX +0.14% are three examples.

I will of course revisit the charts once Brent crude approaches our targets. In the meantime, if

you would like to see how I have used Elliott Wave analysis on other commodities ( including

Light crude oil, which incidentally is headed lower too) please stop by at my other blog

WaveTimes .

Jul 012012

Crude Oil & Brent Crude Outlook: Can I get

more wrong than this?

On 25 June 2012, when Crude Oil was trading around $79, I wrote on Forbes that Crude oil still has

another 10% downside. And on the next day, when Brent Crude was near $92, I said the same thing –

that it has another 10% to go – on the DOWNSIDE, that is. Guess what! Crude went from $77.28 to

$85.34, a move of 10% UP, and Brent Crude went from $91.73 to $98.28 all in one day.Wow! What

happened there?

Now I do have a track record of occasionally getting things really wrong, but this takes the crown. Or

does it? Should we write off the bears? Suppose I say that we will still see Crude down to near the

targets mentioned earlier, I will be unnecessarily shooting myself in the foot. But just as I gave you

technical reasons for my earlier calls, I wish to give you a couple of charts and you can make up your

own mind.