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Crude Oil has seen some pretty wide price swings since start of the new year. Now the drama intensifies and it is at a crossroads. We are speculating that this annual 1*2 Gann Angle support will be defended again in course of the next few days and should trigger another mighty bounce => Dead Cat bounce?!
Since the support was super-accurate defended at the lowest price point of the year so far, it is also the main reason why this trade setup has an exceptionally lucrative risk/reward ratio.
Key for today is found in the monthly candlestick chart. We overlay this very long-term monthly 33 Candle GUNNER24 Up Setup at the # 1 // bear market low of 2016. Where the multi-yearlong countertrend in crude oil began ...:
A 33 GUNNER24 Up on a monthly base offers the currently longest long-term oriented natural targets, magnets and signal possibilities. This to the major important 34 Fibonacci turn number oriented setup measures from lowest price of countertrend up to highest price of the yearlong countertrend what is represented by the final high of 2018.
From this setup measurement follows clearly that the circular Blue Arc is a confirmed yearly resistance arc, and probably even means major important DECADE resistance arc, because this year high – the new DECADE - tested the Blue Arc from below for the very first time, followed by a heavy retracement starting at the Blue Arc.
==> This offers that at the January 2020 top the final high of entire 2020 was made. Cause price has hit a yearlong major resistance which might radiate bear energy for the entire year of 2020 and the first months of 2021. Then Blue Arc runs out in terms of time. For this coming time signal please watch the fat blue-dotted vertical.
Out of # 1 // 2016 Low, what is also FINAL 2009-2019 DECADE low!, springs natural MAJOR support of important 1*2 Gann Angle which offered to the T support at final low of 2018, followed by yearlong upward energy thrust. This year 49.31$ bear price low is printed again exactly at that 1*2 Support Angle and so far the main trend for crude oil remains up, as prices have remained above the 1*2 Gann Angle support since the 2016 bear market low.
An important final higher yearly low, the 2018 bear extreme, was triggered by this 1*2 Angle, so 4 days ago crude oil has tested rising yearly support rail to the T.
So there is a good chance that the just printed February 2020-bear extreme will be the next final low of a year. This option gets some confidence when we observe that year 2016 low as year 2018 low – the two most important lows of this yearlong countertrend - always have been made in course of winter ...
... and crude oil in general loves to reach its final low of the trading year in the course of February.
==> The 2016 bear market low = final DECADE low arrived in course of February. Therefore the now printed bear low might be a or is perhaps even the FINAL 4-year-cycle low!!
Well, the bear case is as follows...:
==> quotations below the important 1*2 Gann Angle in course of the next few days or weeks and odds are fine that the reversal that was triggered at 2020 top becomes legs and in such case crude likely next needs the serious backtest of # 1 // 2016 Low which stands at 26.05$.
Support is support until broken and a strong support test is in play at this time!!! The 1*2 support rail is rare sharp-defined W.D. Gann traffic light, therefore the SL of this long-try setup can be placed very close below the yearlong holding 1*2 Gann Angle support.
==> Please for longs use a SL at 49.25$!
IF 1*2 Ange one more time is willed to radiate bull power in course of the coming days/weeks and even months and 1*2 Support Angle holds this decline recon with the next classic backtest of yearly Blue Arc resistance upmagnet at about 60$ approximately during June, respectively July 2020!
Ok, next step and we switch to the daily view. Because 2020 low has met confirmed multi-year rising support we are allowed to place a GUNNER24 Up Setup at 49.31$ bear extreme.
We recognize that a classic 3 Fib number up setup has developed after this year low. Whereby initial up impulse highs have tested a stronger looking yearly resistance negative from below and failed to overcome this rail at first attempt:
The placed fat dark-red line was major support for 2019 and became broken 6 days ago. Thus, the 2019 line automatically morphes to – perhaps stronger – future resistance. 2019 line runs at about 52.20$ for the next few days.
However, IF # 1 // 49.31$ // 2020 Low really intends to be the final low of the year the just seen break of the 2019 line would only last for short-term and therefore would mean only a short-lived violation of former support and a false break. Let's see ...
The initial 3 day up impulse behaved choppy and “just” tested back 2019 resistance line. This is why market perhaps again wants to test back 1*1 Gann Angle in course of the next week. This natural important time/price support out of 2020 low is 100% exactly confirmed as future important with received # 2-low. After this very first test of important 1*1 Gann Angle at # 2-low the run into # 3-bounce high was triggered.
==> This is why 1*1 Gann Angle is now most important future daily support rail and if crude wishes to test back this til today “strongest” rising daily support the 1*1 support environment offers an entry into a long position.
Most ideal would be an other test of the 1*1 Angle and the natural important “round” 50$ Gann number threshold at same time. This 50$ level is major daily support magnet for the coming days!, as it was major support three different times since May of 2019. Each time crude turned higher off the round 50$ Gann number support, it experienced at least +15% rally.
==> I recommend to buy a shy dent of 50$ to shake the young bulls, followed by a some weeks long bounce continuation up to a normal GUNNER24 Bounce Uptarget, which might be the 2nd double arc upmagnet resistance.
A 55$ at 2nd double arc possible bounce uptarget towards early-March 2020 is more or less conservative target, IMHO, since reactions that start at yearly and possibly even DECADE supports can often be very explosive in time as in price.
Possible major bounce uptarget for a week-long Dead Cat bounce is 55.00$, maybe due for early-March 2020. Yearly Blue Arc backtest at 60$ perhaps due for June/July is the next higher major bounce target.
==> SL for a US Crude Oil long attempt should be placed at 49.25$! This is 6 cents below the current year low.
Risk = 0.73$. Potential reward = 5.02$. Risk-reward ratio 0.73/5.02 or 1:6.88
Be prepared!
Eduard Altmann
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