Oil - A New Long Leg Down Soon BeginsThe oil markets have been something of a puzzle to everyone on account of the fact that they range sideways for long periods of time, move a little bit, decapitate one side of the market, and then range again.
One thing I've been sure of is that after doing $120 post-Ukraine War, and after WTI literally hitting $0.00 ( $-40 settlements lol) this certainly was not the top.
And yet the problem is, this retrace has gone on for too long, with any and every rally increasingly being melted away and melted away. So it's not bullish, either.
There's major geopolitical problems right now.
One for the oil long is that because Russian oil is banned from the market by the International Rules Based Order, it doesn't mean that demand increased for futures-traded oil.
Like, futures oil is primarily the United States' domain, and you know the leftists in Washington are short hard on oil because they sold off the SPR.
How it works is you ban Russian oil from the futures controlled markets. The catch is that Russia still sells oil and sellers always have buyers.
It means Russia sells at a discount or sells in exchange for rupees and yuan instead of petrodollars.
Which means that demand from smaller countries and even bigger producers moves away from futures-traded oil and into Russia's pockets, which ultimately drives the price of commodities down.
Geopolitically, because of the problems between Mainland China, its current ruler Xi Jinping, and the IRBO who operates via Taiwan as a proxy, anything can happen at any time.
China is the biggest wildcard in the world because it's the only 5,000 year old country, has an enormous population with exceptional natural resources, and is ruled by a Communist Party that has become exceedingly inferior and weak.
What this means is that the CCP can either fall or be overthrown literally any day. You won't hear it's going to happen days before on CNN and from The Washington Post.
It will happen during Beijing business hours, which means the middle of the night in Manhattan.
And if Xi is smart, he'll throw the Party away himself and weaponize the 24-year persecution and organ harvesting genocide against Falun Dafa in order to protect himself and the country from "War With Taiwan," which really and always has meant the IRBO trying to take control of China via Taiwan Ukraine Maidan Revolution-style.
Since this event is in the cards, if it unfolds, it means we'll see $200 oil and in a big hurry. Really, in a big hurry.
But before this happens, it only makes sense to melt down all the early longs and liquidate some funds first.
I have an open call on Taiwan Semiconductor where I believe this company, because of the Taiwan situation, is a super strong long hedge in the upcoming markets:
TSM - Taiwan, Your Semiconductor Long Hedge
So, here's the call.
All we have to do is look at the yearly candles and we can see that last year's price action was something of a yearly wick play.
And so if we take this logic and we expect that after taking the high wicks, the low wicks are next, we wind up with some clarity on a set of monthly candles that is otherwise nigh indiscernible.
Unfortunately for bulls, that means we're looking at prices that start with a 3-handle.
Nobody ever believes it when you make a call like this, unless it happens to unfold right away.
And while these markets might manifest in a faster way in the coming months, oil is still something of a landslide down and tractor pull up kind of market maker who employs sharp shakeouts along the way.
Here's the thing: The OPEC production cut news in April was a canary in the coalmine, only because the rally was clearly a stop raid and failed.
The May dump afterwards was a bearish harbinger of doom. It confirms the market makers are seeking continuously lower prices on higher time frames.
On monthly bars and with recent price action, the $62~ level is supposed to be "support."
But this support is likely to be broken if this rally fails.
I believe this rally will certainly fail and we are about to have an extremely significant optimal short entry at roughly $79.
If the theory is true, see how fast $61 comes.
And after $61 is broken, perhaps it will actually be a breakaway runaway.
If that really happens, then the targets are 3-handles in the $34 and $36 range.
You better believe it.
