Crude-Oil Predictions: Back To The Future
Chris Vermeulen | Mar 11, 2020 01:37PM ET
When it comes to our Adaptive Dynamic Learning (ADL) predictive modeling system, we get asked questions from our friends and followers about how it could predict a virus event or how it could predict a price event so far out into the future. The truth of the matter is, the modeling system doesn't predict unknown virus, banking or other types of events.
What it does do, quite well we might add, is identify historically accurate price events (almost like unique DNA markers) and attempts to identify future price events that align with recent price-bar (DNA) setups. In other words, it maps the market's highest probability outcomes by studying past price activity and using a unique DNA-like mapping system. Once this analysis is complete for any chart, we can ask it what is likely to happen in the future.
On July 8, 2019, our researchers did exactly that and posted an article regarding our findings. Some, at first, are in total disbelief that crude oil could fall below $40 ever again while others wanted to know how we came up with the numbers. We set our ADL system to show us what is expected on a monthly crude oil chart going forward and it draws the likely outcome and volatility (highs and Lows).
This Screen Capture From July 2019 Clearly States.../h3
If our 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.
The most critical component of our early research is this statement:
we believe an extremely volatile price move will happen in February through April 2020.
The model gave a hint that volatility would skyrocket throughout this time. And, as we all know, this next crude oil chart highlights the incredible collapse from early January 2020 (near $65) to levels just below $50 in early February. After that, the high price level was near $54.50 and the current low price level is $27.34. We believe this downward price rotation in crude oil completely validates our earlier predictive analysis.
What's Next With The Price Of Crude Oil?/h3
Based on short-term Fibonacci price momentum targets, we could see crude fall to as low as $17 per barrel, but this price target will change dramatically over the next few days depending on if oil bounces higher from where it is now.
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If our research is correct, crude oil may find a bottom somewhere near $17 to $24, with the potential to rally back up to somewhere above $37-$41 ppb before staging another massive selloff. That volatility also suggests a broad price range over the next 60+ days.
Thus, we believe crude oil will attempt to form a bottom below $30, then try a brief rally to “fill the gap” (or partially fill the gap). After that, supply-side economics will take over and crude should begin to move back toward the $30 price level again – just as our modeling system suggested.
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