Comparing Brent and WTI Oil Price to identify 20 week trough

Trough Conundrum

Following on from my previous post where I mentioned there was some ambiguity in identifying the recent 20 week trough, I want to compare the WTI oil price to  the Brent oil price as they move in almost identical cyclic fashion. In that post I concluded that the later placement of the trough in WTI was infact the 20 week trough, even though it looked a little long compared to the running averages for this instrument.

However, having looked at Brent I want to now think again. Brent bottomed on exactly the date of my ideal placement of the 20 week in WTI and did not make a new low. I am concluding therefore that infact the 12th of January was the 20 week trough and WTI making a new low was some noise in the market.

Lets look at the charts:


CL 04-15_daily_04_02_2015


BRN 04-15_daily_04_02_2015This looks good and makes sense to me. The recent surge upwards was caused infact the 2nd 20 day cycle of this first 40 day cycle. We should begin to see resistance at the 80 day FLD before a move down into the 40 day trough. After that price should take out the 40 day high and with it the 80 day FLD – around the end of this month.

The surge has been sharp, just showing how many traders were covering shorts. It does not mean the bear is over though, far from it. This market is long term bearish in my opinion, please take a look at the longer term oil price chart on my previous post for evidence! There should be a great shorting opportunity coming up in a few weeks or so. First though, lets see the shape of this first 40 day, due to bottom mid February.

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