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Have Crude Oil Prices Surpassed Key Bearish Resistance?
Energy traders look for crude's near-term trend. Macroeconomic data vs. Elliott wave analysis.

By Nico Isaac
Tue, 29 Jan 2013 17:15:00 ET
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One of my guilty pleasures in life is a terribly cheesy reality show called "The Bachelor." The premise is simple: Over the course of 10 weekly episodes, one guy puts several women through various date tests. Each week he gives roses to those women who have passed onto the next round. In the season finale he hands a final rose to the woman he has chosen to marry. 

When the man is asked what he hopes to find in his future wife, the answer is usually a variation on this same theme: a beacon in life, who is consistent in her thoughts and actions.
 
Now imagine a show like that for financial traders, who seek the same stability. But instead of 20 contenders who vie for the final rose, there would be just two:
 
·         Bachelorette No.1: Mainstream fundamental analysis
·         Bachelorette No.2: Elliott wave analysis
 
Let's see how these two  fare in the very real world of crude oil's recent price action.
 
On Jan. 29, crude prices rallied to their highest level in four months. But as the recent slew of news stories below makes plain, the mainstream outlook failed the "consistency" test regarding what would drive crude's near-term trend:
 
·         Political unrest in the Middle East is bullish for crude: "Crude Oil Tops $97 On Middle East Unrest." (MarketWatch)
 
·         Political unrest in the Middle East is a non-event for crude: "Crude Oil Prices Stabilize. Turmoil in the Middle East, such as the [Jan. 28] attack on an Algerian pipeline hasn't yet halted any major oil flows." (Associated Press)
 
·         The supply situation is bullish for crude: "Does 2013 Herald An Oil Supply Crisis?" as one European energy agency opens the conversation on "oil tightness." (Oilprice.com)
 
·         The supply situation is bearish for crude: "The Organization of Petroleum Exporting Countries (OPEC) reveals the 'market is well-balanced. The market is expected to remain well supplied to meet expected demand growth. Resource availability is not an issue'...We appear to have moved on from the peak oil debate." (Bloomberg)
 
It's fair to say that such contradictions would NOT earn bachelorette number one the final rose.
 
What about the second contender Elliott wave analysis? Well, here we turn to EWI's premier, trader-focused Energy Specialty Service. On Jan. 29, Energy Specialty Service's daily analysis of crude oil satisfied the full objective package, including these two charts below:  
 
 
This is an Elliott wave labeled daily chart of Crude oil vs. volume and open interest -- it's crucial for determining whether the recent rally has staying power; namely, the chart identifies a key resistance level that, if surpassed, would call the bearish count into question. 
 
 
 
A labeled Elliott wave monthly continuation chart of Crude oil since 1996.
 
The Jan. 29 Energy Specialty Service also presents a 4-plus minute long video update on the near-term Elliott wave pattern underway in both NYMEX and ICE Brent crude oil.
 



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