Elliott Wave InternationalmyEWISocioniomics.Net
Home > Energy

Crude Oil: How to Catch the Next Move Without Reading the News
If you know what to look for, the energy markets will often tip their hat before the news.

By Vadim Pokhlebkin
Fri, 21 Sep 2012 17:45:00 ET
Add to Facebook Add to Twitter Email to a friend Printer Friendly

Crude oil ended the week of Sept. 17 on a bright note, although for a while things looked scary.

First came that out-of-the-blue tumble on Monday (Sept. 17) -- from near $100 to $94.65. The selloff did not stop there, and on Thursday (Sept. 20) crude fell as low as $90.96 a barrel.
 
But then on Friday (Sept. 21), it gained almost $3 when the price touched an intraday high of $93.84.
 
Predictably, the news attributed the rally to a "fundamental factor" -- namely, "central bank stimulus optimism" related to the European Central Bank's new bailout plan for Spain.
 
Granted, the timing of the ECB announcement did fit the timeline. Still, could you have seen the rally before the ECB had spoken?
 
Yes. As early as 8:39 AM on Sept. 20 -- almost a full day before the ECB made the news -- our Energy Specialty Service editor, Steven Craig, posted this intraday update for subscribers (excerpt; some Elliott wave labels erased for this article):
 
NYMEX Crude (Intraday)
Posted On: Sep 20 2012 8:39AM ET / Sep 20 2012 12:39PM GMT
Last Price: 91.95 (Nov)
 
 
The overnight price action looks to have fulfilled my expectations for a smaller degree fourth and fifth wave [down]. At this point, trade above the 92.47 overnight high would offer the initial hint that wave iv is complete and that wave v of (i) is underway. 
 
Later that same day, Steven added in his end-of-day forecast:
 
"I'm looking for impulsive upside price action to support the idea that the...advance is underway from today's 90.96 low."
 
The next morning came the rally -- and the news from the ECB.
 
The take-home message here is this: Energy markets will often tip their hat before the news. The market's collective psychology changes according to a pattern -- Elliott wave pattern. You just have to know what to look for. 

In this example, our Energy Specialty Service expected a rally because crude was finishing a 5-wave decline. The Elliott wave model said that a move in the opposite direction was due next.


How Can You Tap into Energy Market Volatility?

Find your next opportunity in energy futures and ETFs with help from a pro: EWI's Energy Specialty Service

Let EWI's most specialized forecasting service for global energy markets alert you to opportunities happening right now in:
 
>> Crude oil futures
>> Natural gas futures
>> Energy ETF: XLE
>> Energy ETF: USO
>> Energy ETF: UNG
 
Subscribe today and get instant online access to comprehensive intraday and daily forecasts that can help you make smarter trading decisions.
 

 

 

 

 

 

Rating: - based on [8 rating(s)]
Rate this content:
  


Identify Your Next Opportunity in Oil Now

Energy Specialty ServiceTurn possibilities into probabilities with insight from EWI's Energy Pro Service, a service designed to help you stay in front of the trend in Energy Futures.

Actionable forecasts across all timeframes help you anticipate and act on opportunities in oil, natural gas and other major energy markets.

Learn how you can put an Elliott wave expert to work for your trading>>

Free Video Course


Learn the Why, What and How of Elliott Wave Analysis

Financial media use news and economic events to explain market moves. Steer clear of this misguided approach. Take part in the Elliott Wave Crash Course to learn what really moves the markets.

Energy


© 2014 Elliott Wave International

The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International’s market-oriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.