Vladimir Putin’s unprovoked aggression against Ukraine is sending shockwaves across the globe. Sanctions from the West are piling on the Russian regime, sparking fears that energy deliveries might be in danger.
As a result, the price of oil surged to heights not seen since the annexation of Crimea in 2014. Earlier this week, WTI crude oil reached $114.48 a barrel before returning below the $110 mark as of this writing.
What you may find interesting is the fact that you didn’t have to predict Putin’s madness in order to predict the oil surge. In fact, Elliott Wave analysis managed to put our EW Pro subscribers ahead of it as early as Jan. 10. Here is the chart we sent them a month and a half prior to the war in Ukraine.
Crude oil ‘s daily chart was sending bullish signals as early as mid-January. It revealed a five-wave impulse, labeled (1)-(2)-(3)-(4)-(5), in what we thought was the first wave of an even bigger rally. While the price was approaching $79 a barrel, we thought wave II was over at $62.23. Hence, it made sense to expect more upside towards the levels north of $100 in wave III.
However, since nothing in the markets is ever guaranteed, we kept a close eye on $74.03. A drop below this key level would’ve invalidated the bullish outlook. Almost two months later now, the updated chart below shows how the situation unfolded.
$74.03 was never in danger. The bulls took the wheel right away and haven’t given it up still. The rally to over $114 so far looks like a textbook third wave. It is fast and sharp with little pullbacks along the way. Furthermore, no-one knows where its end is going to be, so betting against it is not a good idea.
It is hard to be optimistic about anything when an aggressive dictator is waging wars and making nuclear threats. Still, the Elliott Wave principle’s ability to somehow put us ahead of crude oil ‘s jump is remarkable. We trust it to be our guide in other markets, as well.