- February 24, 2022
- Posted by: Tradingshot Articles
- Category: Commodities
WTI Oil is among the major gainers of the current geopolitical conflict in Ukraine, hitting the $100 mark for the first time in roughly 8 years. Fundamentally this happens most of the times during periods of unrest or even worse war, such as the one that broke out yesterday. In times like these, it is very useful and most efficient to zoom out of short-term charts and look into the longer term picture. Long-term investors should be particularly interested in what this analysis reveals about WTI’s outlook for the next 12 months.
This is on a 1W time-frame and displays Oil’s in Eras of 10 years (roughly). The current spans from the June 2014 Top until today and is very similar so far with the one from October 1990 to October 2000. Given the fundamentals of the two periods, with roughly similar geopolitical tensions in a 10 year span, it is no surprise that the Cycles’ legs are identical. What’s left of the current Cycle is leg (6), which represents a major correction back to the High Volatility Zone, which currently is within roughly the 0.382 and 0.618 Fibonacci retracement levels (as opposed to the 1990s which was within 0.5 – 0.618). This suggests that based on Oil’s cyclical behavior, its systemic response should be a correction within roughly $53 – $43. It may seem, and surely is, a long way from the current $100 landmark but so was the $100 target we at Tradingshot suggested back in June 07 of last year when the price was still at $69.20, but clearly had broken above a 13 year Lower Highs trend-line:
In our opinion, as this energy and geopolitical crisis will come to an end, WTI will turn into one of the best sell opportunities for the next 12-18 months.