Will crude rally to the $36 area in the next few days?

With everyone so bearish on oil, the market is bound to rise. John C Burford uses Elliott wave theory to find out when.

While filling the tank of my car last week, I chatted to the service station manager about where he thinks fuel prices are heading. This was my sneaky way of taking the sentiment reading of the oil market. Yes, a sample of one is hardly scientific, but what he said was revealing. He believed retail prices will continue lower in fact, he was ordered to drop prices that morning by a penny.

Immediately, I wondered if he was gripped by 'recency bias' a well-known phenomenon championed by most economists and pundits (and money managers). When under its spell, your view is skewed by the recent trend. Oil prices have headed lower, so you will tend to believe the trend will continue.

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John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.