Brent crude oil (IPE.FB) saw a big decline of 2.8% on Tuesday to close at $113.43 per barrel, but the market is on such a strong trend higher that it might not even be phased by such a loss. Brent saw a fake rally on Monday followed by a big decline on Tuesday, and neither one crossed above the all-time high set on Friday. To some it may appear that the top is in, but history suggests there might be more yet to squeeze out.
Q: How has Brent crude responded to a fake rally and a 'Nine Higher’ (nine successive days where the four-day momentum is positive) one value ago followed by a big decline?
A: According to the eight previous occurrences of this event omitting any repeat occurrences within 10 trading days, EventEdge indicates that Brent crude has shown a strong bullish edge that peaks nine trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Tuesday, April 29, 2008) is Monday, May 12, 2008.
IPE.FB rallies in 100% of the cases (8 of 8) by an average of 4.6% relative to the close on the event date. The overall return of the eight cases is 4.6%, which, based on the close on the event date ($113.43), provides a target price of $118.65.
To see this in EventEdge® click here.
HYPERLINK "http://www.markethistory.com/staff/detail.html?s=mickey" Mickey Schoenhals is an analyst with Markethistory.com.
