Since last writing on the crude oil market in the short-term, the price of oil has declined to within a couple of dollars of our previously forecast downside target. This was underscored by the parabolic dome highlighted in the previous report. The bowl acted as a resistance by pushing the price of crude down about $5/barrel where it bottomed last week at its secondary low for the year.
As we've talked about before, crude oil tends to travel along a series of concentric curves in the form of a parabolic arc. These parabolic curves may take the form of bowls or domes, and at any given time a series of interlocking bowls and domes are present the chart (largely invisible to the naked eye without the aid of drawing tools). The preceding mini-decline in the price of crude was guided by a large parabolic dome, which was broken to the upside on Thursday, Feb. 10.
Earlier, we followed the progress of a short-term bowl that was the dominant market curve in late December, which kept the late 2004 decline in the oil price from going straight down in rapid fashion. This particular bowl is still very much alive and has not only kept the oil price afloat above the pivotal $40 benchmark area in recent months but it now appears that this bowl has become dominant once again now that the short-term dome has been broken. A near-term advance back up to the $50 level or higher should follow.
In our previous look at crude we noted that the price line was about to hit the upper boundary of a short-term uptrend channel. This subsequent double-top against the upper channel boundary produced the pullback to the lower boundary. Now that crude has once again found support from this channel its prevailing upside momentum is once again coming to the rescue to lift the price higher.