Oil has experienced a true market crash, declining 47 percent following the peak in June. However, the downtrend is declining at an unsustainable rate and the market has become extremely oversold across intermediate-term and short-term time frames. As a result, the decline will almost certainly be followed by a violent oversold reaction, and the large intraweek rebound that occurred last week suggests that the reaction may be imminent.
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Additionally, we are 32 weeks into the weekly cycle following the intermediate-term cycle low (ITCL) that occurred during the week ending May 9 and the latest ITCL is imminent. The intraweek rebound last week suggests that the impending ITCL may have formed this week. A strong advance next week would confirm that the latest intermediate-term low is in place and forecast at least several weeks of strength.
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From a short-term perspective, the latest short-term cycle low (STCL) formed early last week.
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Looking ahead, a strong alpha phase or beta phase rally that approaches the last beta high (BH) at 69.31 would signal the likely transition to a bullish short-term translation and indicate that the intermediate-term low is in place. Therefore, it will be important to monitor oil market behavior closely during the next several sessions.