FLASH Overnight, we learned of the missile strikes in Syria by US, French and British forces on the evening of Friday the Thirteenth, so that date was very unlucky for some. Stock markets have been largely ignoring this foreseeable development in the volatile Middle East – which has suddenly got a whole lot more so. They cannot ignore this any longer!
Oil markets, on the other hand, have been fully alert to this as they have moved up very sharply by $5 last week to new highs and my long-standing $70 target is now within sight.
Are Cryptos coming back from the dead?
Bitcoin made its high on 17 December and has been in decline ever since. It has dropped by a Fibonacci 2/3 to a low of 6,400 on 1 April – a most suitable date to set a low. Why? Because hedge funds are massively short the major cryptos and when the bear trend decides to end, they would be caught the wrong way, as is their custom. And the joke would be on them.
Since that low, the market has been edging up, but got a major boost on Thursday with a ‘shock’ $800 surge. Apparently, on that date, there was no news to account for the jump. And the MSM went wild trying to find a rationale – but came up enpty handed.
On Thursday, I posted a comment on a typical MSM headline that expressed astonishment that the market had the temerity to stage a major leap with no news to account for it! Here is one: Mysterious Bitcoin rally perplexes market analysts as it soars towards $8,000.
This is what I sent to VIP Traders Club members yesterday: I have a suggestion to the guy that wrote that – he should become a member of our Traders Club and he would have been well prepared for the rally, which was no mystery to us at all! We have previously taken big profits on the downside and have been long for a while based on my reading of the charts.
Because the MSM is totally oblivious to the forecasting power of well-established technical tools, they are hooked on the traditional ‘news makes the markets’ paradigm. In fact, they have the cart before the horse – it is the markets that makes the news. But that is what their readers want – a plausible story they can chew over.
Most of their readers are a pretty unsophisticated bunch – otherwise why would they lap up such stuff? They have no grasp of how markets really work, so they are suckers for a good story. Maybe that works for a while, but at major turning points – such as we have now – they come unstuck. They buy at tops and sell at bottoms.
And boy, am I glad they do! Otherwise my methods would not work half as well as they do.
We are trading Ethereum in the Club and this is the daily chart
The latest wave down contains a pretty five down on a momentum divergence and we took long positions near the low at the 400 area. Now, with last week;s ‘mystery’ surge, it has broken above the major trendline resistance. My next target is the 600 area.
The oil market hots up
Oil inventories are very high, yet the market keeps climbing. AndUS shale production is surging. What’s going on? As always, the market is looking forward, not backward. It sees production tailing off and even disruption in the shipping lanes out of the Middle East (Straits of Hormuz) for the giant tankers.
But of course, by using the right technical tools these bullish developments would have been foreseen long ago to a decent degree of confidence. Here is the very long term chart of crude
There are several stand-out features. There is the Double Bottom reversal signal at the 2016 lows under $30. That came on the heels of a lovely five down out of the multi-year blue wedge. That pattern took years in development – and was a nightmare to trade! There were whipsaws galore, but even so we managed to make profits in this period.
That 2016 low was made on a very strong momentum divergence – and that signalled a strong reversal which is still in progress.
So even at the depths of the 2016 lows, I could foresee a large rally phase coming. I did not know the news/fundamentals in detail that would emerge post-2016, but I had confidence in my bullish stance. Applying my Fibonacci levels, I came up with a target in the $70 area – with a possible higher one at $80.
I also have a good pink tramline pair with the market last week pushing up away from the upper line of resistance. That is bullish action – adding to my confidence I shall see my target reached.
But the whole rally appears counter-trend to the main downtrend. I expect the market to fall hard when it tops. I do not see $100 oil any time soon.