Keep a close eye on crude oil. As I write crude is breaking out above a declining upper trend line as seen in Figure 1. Whether this breakout proves to be “for real” or a “fake out” may well have important implications moving forward.
Figure 1 – Crude Oil attempting to breakout to the upside (Chart courtesy of www.Barchart.com)
As you can see in Figures 2 and 3 (and as I wrote about here), both the daily and weekly Elliott Wave counts for crude are pointing decidedly to the bearish side. Figure 2 – Daily crude oil with Elliott Wave count (Courtesy: ProfitSource by HUBB)
Figure 3 – Weekly crude oil with Elliott Wave count (Courtesy: ProfitSource by HUBB)
Look for one of two scenarios to develop from here:
1) The current breakout proves to be “for real” and the bearish Elliott Wave counts go “poof” and vanish into the ether (and don’t you just hate that about Elliott Wave counts?)
2)The current breakout proves to be a “fake out” and crude reverses back to the downside.
If crude does reverse back to the downside after this current pop runs its course, then the likelihood of another serious leg down for crude increases greatly.
Now this is what I call a potential “Summer Blockbuster” so I will be watching intently. Hmm, where’s my popcorn?