www.armstrongeconomics.com
Right now, the fear has been that Iran will start dumping oil now that
the sanctions have been lifted. Thus, crude has been falling out of bed
in a nightmare scenario. The fact that Crude was below $35 and then
rallied to close above it for the 2015 year-end closing was a warning
that the long-term may not be as bearish as it appears at first glance.
Crude still elected a year-end sell signal at $41. So that meant lower
lows. But our other two numbers were $35 and $25. Breaking $30 certainly
focuses our attention on the $25 level as support on a system basis.
Technically, the $25 area is also showing up as support during January.
Cyclically, this collapse in price has been on target since our timing
projections have been January, March, and June here in early 2016. We
have warned that 2016 was the target for at least the intraday low.
When we start to look at what the computer is projecting in time,
indeed 2016 is a Directional Change. It appears choppy until about 2018.
From there out into 2022 to 2023/2024, which will be the next top in
the Economic Confidence Model, we see a sharp rise in volatility. This is lining up with two primary factors – WAR and a MONETARY CRISIS.
So for now, we should focus on the $24-$25 area as the next
psychological support zone. Our two key areas of target support for 2016
are $25 and $16. Looking forward, we employed our WHAT IF models to try to forecast where the Yearly Bullish Reversal (buy
signal) will be generated from a low at either position in 2016.
Interesting enough, in both scenarios, we end up with $40-$41.50. This
will clearly become the major resistance moving forward. It does not
appear that crude will ever make new intraday highs. It must fight
against a dollar rally which appears to be still on the horizon and a
shift to electric cars.
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