Crude Oil Action Corroborates Middle East Outlook; Watch Decisive Period in 2019!
Crude Oil Action Corroborates Middle East Outlook; Watch Decisive Period in 2019!
11/27/18 The Bridge: The Crude Conundrum
Getting back to the Canadian currency, it is completing the third decisive phase of 2018 – when another multi-month low was/is most likely. That could/should usher in the time for another rebound into 1Q 2019.
With Crude just fulfilling major weekly, monthly, yearly and even multi-decade cycle highs, how will that impact the CA$ long-term?
One of the better synopses of that oil outlook was reiterated in the April 2018 INSIIDE Track, describing how 3Q 2018 should produce a major turning point:
3-31-18 “Looking out over the next 6 – 12 months, a decisive turning point is expected in 3Q 2018. Starting from the larger cycles and working down, the governing 1 – 3 year cycle is a 27 – 30 month cycle that has impacted Crude since July 2006, its penultimate high. 30 months later, Crude set a major bottom in Jan. 2009.
It then rallied for 27 – 28 months (into April/May ‘11) and subsequently set its Aug. 2013 peak another 27 – 28 months later. From there, it plummeted for 29 – 30 months, bottoming in Feb. 2016. 28 – 30 months later is June – August 2018. If you look at this entire cycle from a quarterly basis, 3Q 2018 is the target cycle…
Overriding that is a ~5-year high – high cycle (3Q ‘08 – 3Q ‘13) that also targets 3Q 2018 – most likely for a peak. Underlying it is a 15 – 16 month low (1Q ‘16) – low (2Q ‘16) Cycle Progression that aligns in 3Q 2018. The ascent of that low – low cycle argues for 3Q ‘18 being a high.”
That ~5-Year Cycle remains one of the most consistent in Crude and is reinforced by an overriding ~10-Year Cycle – that also portended a peak in 3Q 2018. Weekly cycles were converging in late-Aug./early-Sept. & late-Sept./early-Oct. 2018, with the former ultimately creating a penultimate high while the latter timed the ultimate peak.
[It is important to remember that a ’5-Year Cycle’ is one that times a 6 – 12 month or longer peak every 5 years. It connects to previous (and future) similar highs at a 5-year interval. During uptrends, that 5-Year Cycle high might only hold for a year and then give way to higher highs (stretching out until the next 5-Year Cycle high).
During downtrends, the opposite is often true and a 5-Year Cycle peak could hold for many years – even many more than 5 years. Of course, there would likely be descending highs at that 5-year interval. The important point is that Crude just fulfilled this myriad of decisive cycles and has plunged since then.]
Not only did the oil complex fulfill Crude-specific cycles, peaking in 3Q 2018, it also perfectly fulfilled Middle East cycles that have been discussed for over a decade. Those cycles were forecast to time a ‘bullish’ period in Middle East tensions and anxiety from late-Sept. 2017 into late-Sept. 2018.
Beginning with the late-2017 announcement that the US was moving her embassy in Israel to Jerusalem, and culminating with the Saudi/Turkey tensions over the execution of Jamal Khashoggi, oil markets and Middle East tensions moved in lockstep with this uncanny cycle analysis. As is so often the case, the related market peaks at the height of ‘bullish’ news (or, in this case, the height of Middle East tensions).
So, where does that leave the petro-related Canadian Dollar?”
Crude Oil has plummeted since peaking in early-Oct. while fulfilling multi-month, multi-quarter & multi-year cycle highs in/around late-Sept. 2018… and also completing the latest phase of Middle East cycles that projected higher oil prices into late-Sept. 2018. The next phase of bullish oil cycles is projected for 1Q/2Q 2019 – leading into a potential (secondary) high in/around May 2019.
Along with this action in oil markets, the Canadian Dollar (& Russian Ruble) could see related movements with the Loonie focused on intermediate cycle highs in Jan. 2019. Overlapping that, longer-term cycles argue for a bottom in Crude & Energy markets in the coming weeks/month, followed by a rally into ~May 2019.
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.