WTIC West Texas Intermediate Crude Oil Weekly Chart 11-Year Low Oversold Falling Wedge Positive Divergence

Everybody and his brother appears on television wringing hands and professing the end to oil, alas, the consensus says there is nowhere to go but down for oil. Funny how all these same pundits said oil was going to the moon during summer time 2014 when overbot conditions, a rising wedge (bearish pattern) and negative divergence formed (red lines). As expected, oil is spanked lower in 2014 and continues down the rabbit hole, however, the green lines show the overbot conditons, falling wedge (bullish pattern) and positive divergence across all indicators. Thus, the pundits are wrong again as usual.

Oil prices would be expected to recover using the multi-year red trend line as support. WTIC and Brent oil are both at 11-year lows. Oil will likely bounce along sideways well into 2016. Very interestingly, the WTIC monthly chart is agreeable to the price bounce forecasted, however, the MACD line remains weak and bleak on the monthly. Thus, oil should bounce higher, and the recovery bounce will likely be very strong since shorts will be covering creating more rocket fuel, then a sideways move say into the new year well into January.

This upside action provides a chance for the possie d on the weekly chart to play out with buoyant prices, but then the MACD negativity on the monthly chart will reassert itself with oil prices rolling over again, let's say mid to late January, maybe early February, and oil will come back down to the current lows at that red trend line say in February-April. Charts will have to be reviewed in a couple weeks or a month to assess the progress of this analysis.

If you bring up the WTIC daily chart, there was possie d which created the slight bounce on 12/14/15. Price comes back down due to the weak MACD line only over the one month time frame. The MACD line is positively diverged on the daily chart over the last four months. So the daily chart is setting up to agree with the weekly and monthly in the very near term. If price sneaks lower it will lock in the positive divergence and likely create the near-term bottom let's say at 34.5-36.00.

Oil can likely be scaled-into right now for a long play. Keystone has no position in oil currently. To end the year and into the new year perhaps through January, oil should recover to the 38-48 area, then in late January or February roll back over to the downside back down to sub 36, then likely bottom in March-May at 32-35, then sideways to sideways higher there forward. Of course, the forecast will be refined as time proceeds. Going forward, from the dollar and euro charts, the USD dollar index is expected to move sideways to sideways down while the euro is expected to move sideways to sideways up (despite the ECB QE); this projection is opposite of the Wall Street consensus. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added on Thursday, 12/24/15, at 11:48 AM EST: Oil prints a strong +6% and more rally but you knew that was going to happen. WTIC oil is at 38.07. Brent oil 37.84. Remembering Keystone's 80/20 rule, 8's usually lead to 2's so 38 hints that 42 is on tap.