Technical Update - Crude oil. Is this the 5th extended wave higher?
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Brent Crude Oil shooting higher this morning due to Russia invading Ukraine. Brent Oil has reached 1.764 projection of the November 2021 correction but is not unlikely to continue higher to 2.00 projection at around $107.68
That level is also more or less in the middle of the consolidation area from 2011- to 2014 just prior to the bearish break out. The current strong bullish move could be the 5th vawe higher if the correction we saw in November 2021 was the 4th corrective wave. (Normally a 4th corrective wave would be more complex than this one seems to have been)
Normally the 3rd wave is the longest but in commodities it is often seen to be the 5th. However, if this is the the 5th wave and should be at least a long as the 3rd wave the target would be around $116.68.
RSI and MACD on Monthly currently supports that scenario with no divergence
Picture is identical for WTI Light Sweet Crude oil hitting minor resistance at around $98.86 but there is room up till resistance at around $110
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.