The Top of Wave ⑤ in Crude Oil Is Fast Approaching

Excerpted from The Elliott Wave Theorist – June 9, 2008

Since calling incorrectly for the peak of wave ⑤ in October 2007, I have waited for the next likely juncture. As noted then about fifth waves in commodities, “some of them are blow-offs.” With oil suddenly leaping as much as $10 a day, we should postulate an extended fifth wave, which in turn allows us to attempt to forecast the range for a peak.

To review the big picture, the July 25, 2006 EWT presented a 16-page Special Report on the long term picture for crude oil prices and a history of EWI’s long term calls on this commodity. Figure 3 shows the projection from a few months earlier, and Figure 4 shows the labeled Elliott wave structure published at that time. The projected peak for wave ③ had just arrived, and wave ④ was due. From that high, oil fell from just under $80 per barrel to a hair below $50, a 36 percent correction. That was wave ④.

Today, oil prices are back in the news, and the form projection presented in March 2006 (Figure 3) is still good, with wave ⑤ in its late stages. Two major magazines have run scary oil covers, as you can see here. According to Paul Montgomery of Universal Economics, major covers usually appear about a month before major turns in markets.

So, one of the greatest commodity tops of all time is due very soon. Ideally, crude oil should end on a violent spike high in the $160-$189 range.

I follow only the long-term picture in oil every few years, but our energy analyst Steven Craig has been right on top of the shorter-term nuances in oil prices and the big picture as well. If energy prices are important to you, find out why he has a faithful following by checking out our Energy Specialty Service at http://www.elliottwave.com/wave/EWTenergy.