CL just reached our next downside target and should see a substantial bounce here.From our Aug 3 post The Dollar Days of Summer:
posted Aug 3, 2015: Dollar Days of Summer
Unless it bounces back by the end of the day, CL appears headed for the 1.618 at 40.57. Interestingly, the timetable seems consistent with our Aug 13 analog target.
Note that this is the 1.618 extension of the bounce from 49.69 in Mar to 64.45 in May. It also lines up nicely with the white channel .236 line and the falling red channel’s midline. While there is additional downside potential per the falling white channel, this is a solid Crab Pattern [EXPLAINED HERE.] The 1.618 Fibonacci level target usually provides a substantial reversal.
There are several potential upside targets, depending largely on what the Fed minutes have to say. And, this being the age of head fakes, there is one to consider here.
Continued for members…
Should the Fed present some really bearish minutes this afternoon, CL could easily help lead the way further south — perhaps completing the SPX H&S Pattern at 2044 we’ve been wondering about.
The bottom of the falling white channel intersects with the bottom of the falling red channel around Aug 25 at 36.50 or so.
If, on the other hand, today’s 27-pt decline prompts them to release the more bullish version of minutes, then CL could easily lead the way higher (or, at least provide the support that prevents any further downside.)
The top of the falling red channel is this morning’s high at 42.68. And, a breakout of the red channel would indicate a move up to backtest the white midline — currently at 45.68 and optimally on Aug 25. This move could well serve as the stick for our Japanese friends who, so far, have not taken the carrot which was offered in the form of lower oil prices.
The most bullshit bullish move (if the BoJ doesn’t play ball with more QQE) would be a return to 55.33 around Sep 15. It represents the top of the white channel and the purple .618.
This last scenario has been bouncing around in my brain for the past week or so. What if the BoJ can’t be convinced to trash the yen a little more? With the yen carry trade in danger of unwinding, might CL serve as the next vehicle?
I can easily envision a scenario where the BoJ balks, and the rest of the central banks run CL back up to heights that make life very difficult for Japan. Someone, probably Draghi, sits down and makes a deal with Kuroda: “if you want your lower oil prices back, then we need to see the USDJPY up at 150 right now.”
Sounds a little Machiavellian, I know, but I wouldn’t put it past them. And, I absolutely think it would work.
From our Aug 3 post The Dollar Days of Summer:
While there is additional downside potential per the falling white channel, this is a solid Crab Pattern [EXPLAINED HERE.] The 1.618 Fibonacci level target usually provides a substantial reversal.
There are several potential upside targets, depending largely on what the Fed minutes have to say. And, this being the age of head fakes, there is one to consider here.
The top of the falling red channel is this morning’s high at 42.68. And, a breakout of the red channel would indicate a move up to backtest the white midline — currently at 45.68 and optimally on Aug 25. This move could well serve as the stick for our Japanese friends who, so far, have not taken the carrot which was offered in the form of lower oil prices.