Oil - Market Cycles - 22nd February 2023

Has the 18 month component low formed in crude oil? A triangulation forms with the 80 day VTL providing a crucial line the sand for the next move

Essentials: Nominal Model | FLD | FLD Trading Strategy | FLD Trading Strategy (Advanced) | Principle of Nominality | Underlying Trend | Time Frequency Analysis

Analysis Summary

WTI Crude oil has moved sideways since our last update, notionally establishing the 80 day nominal low at a higher low than the low in December. However, that low is somewhat tenuous, with an overall fairly flat shape to the 80 day component, leaving us in some limbo as to the position of the 18 month component. The move to the 54 month FLD support around 55-60 is still very much a viable area but time is running out and it is worth looking at the bullish options in this report.

The 18 month component is running at around 17 months from the time frequency analysis and is currently 17.9 months along it’s phase, assuming the previous low was in August 2021. A move to the 54 month low in the next month or two will dictate a shift in that low to December 2021. This would, however, represent a significant frequency modulation from the sample average duration of around 17 months. This should be considered when speculating on the position of the longer component. Price is currently sitting directly under the 18 month FLD peak, a price trough here representing a flat underlying trend, perhaps what we might expect from the proposed final 18 month component of the larger wave.