Crude Oil Is Headed Much Lower By Early 2020
Chris Vermeulen | Jul 10, 2019 12:32PM ET
Our Adaptive Dynamic Learning (ADL) predictive price modeling system is suggesting crude oil will likely continue to find resistance near $64 as a price ceiling and trend lower over the next 3 to 5 months – eventually breaking below the $40 price level near the end of 2019 or in early 2020.
Our research team believes this move could be contingent on a continued decline in global economic activity as well as our research suggesting that global currencies could be setting up for a breakdown event.
The USA and FED will do everything possible to keep the economy strong and hold markets up by talking about rate cuts, but eventually the music will stop and until then, we need to be long and strong stocks and keep a close eye on leading indicators like small caps, oil, transportation and industrial sectors for early warning signs.
We believe the breakdown in support for crude oil will coincide with a general perception of global economic weakness, foreign central-bank posturing and the possibility that foreign currency weakness may push global demand for oil much lower than current expectations.
The volatility increase suggested near the right side of this chart in late 2019 and early 2020 are indicative of oil prices reaching a critical support level while attempting to re-balance supply/demand-side economic factors against historic price lows. This will likely become a period where global oil traders feel the need to try to push oil prices higher while supply/demand factors settle to establish a basis price level for future price trends.
If our ADL predictive modeling is correct, we will see rotation between $47 and $64 over the next 3+ months before a breakdown in price hits in November 2019. This will be followed by two fairly narrow price range months (December 2019 and January 2020) where oil prices will tighten near $45 to $50. After that tightening, we believe an extremely volatile price move will happen in February through April 2020 that could see oil prices trade as low as $22 and as high as $51 over a two-to-three-month span.
As we've said, 2019 and 2020 are going to include incredible opportunities for skilled technical traders and investors. Think about how a move like this in oil and the global markets will effect precious-metals and the U.S. dollar?
I can tell you that huge moves are about to start unfolding not only in currencies, metals and stocks, but globally as well and some of these supercycles are going to last years
As a technical analyst and trader since 1997, I have been through a few bull-bear market cycles. I believe I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital.
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