Crude Oil continues to be a big mover as the supply glut has really pushed global capacity to its limits. Dozens of full tanker ships are anchored off the California and Singapore coastlines waiting for demand to pick up. As long as the Virus shutdown persists globally, the supply gut will continue to wreak havoc on oil price levels into Summer. As of early Monday morning, Crude Oil is lower by -17% to $14.10 as I type.
What most readers of our articles here don’t fully grasp is just how accurate our long-term predictions truly are and its why we link to past research posts that clearly prove our analysis can be deadly accurate.
You may remember our incredible research post from July 2019 which suggested Crude Oil would collapse in early 2020 calling out a potential $14 price target.
You may also like to review our warning from January 2019 related to Oil and Energy. We also predicted the gold bullion breakout and bull market to happen last year in April, May, or June, which is it, and we called that six months prior. Eric Sprott talked about our gold prediction and how much he liked out analysis on his podcast back then.
Our Adaptive Fibonacci price modeling system is suggesting a support zone near $9 to $18 may become a new sideways trading zone for Crude Oil. We believe the downside risk to price levels is still excessive, but we also believe that true price valuation levels will keep Oil above $4 ppb as global demand will eventually recover. Thus, we believe Oil will likely settle into a sideways price range between $9 and $18 as this virus event continues. It may attempt brief moves outside these ranges but eventually, settle back into this range until true demand begins to accelerate higher.
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Daily Crude Oil Chart
Adaptive Fibonacci Price Modeling
This Daily Crude Oil Chart highlights our Adaptive Fibonacci Price Modeling system’s results and clearly shows the Support Zone. We believe this Zone will become a new sideways price channel for Crude oil.
Weekly Crude Oil Price Chart – Support Zone
This Weekly Crude Oil Price chart also highlights the Support Zone. The potential for Crude prices to retest the $7 to $8 price range based on this massive supply glut is not out of the question. We believe Crude Oil will settle into the Support Zone while attempting to establish a price bottom near $7 or $8 over the next 90+ days. It may become an extended sideways bottom/flag formation as the bottom forms.
Our suggestion is to expect a more sideways bottom formation in Crude Oil over the next 60 to 90+ days. The supply-side glut is really pushing price levels down to extreme levels. Nothing will change that aspect of the market dynamic until we exit this Virus shut-down and demand starts to skyrocket higher. That may come in August or later in the year.
We do believe Oil will attempt to find support above $7 to $8 ppb as we believe the supply glut will push oil prices to a “core value level” where global buyers will attempt to say “we can’t sell oil at anything less than $x.xx”. We believe that level is $7 to $8 ppb overall.
As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is an incredible year for traders and investors. Don’t miss all the incredible trends and trade setups.
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Chief Market Strategies
Founder of Technical Traders Ltd.