You know what they say about quintuple tops | Forexlive

The old says is that a triple top is just a double top that didn’t get its cue.

What it means is that that triple tops are a worse place to sell than double tops because they initially failed as a reversal signal. It suggests that the market was unable to reverse after the second peak as expected, and needed a third peak to finally change direction.

Well what about quintuple tops?

In the case of WTI crude oil, that initially worked as the 5th test of $83 led to a break through the bottom of the range and down to a low of $64.12. There was something of a squeeze on crowded oil longs there so the downside on the bank worries might have been overdone but not long after the bottom, OPEC and Russia swooped in and delivered a surprise production cut through year end.

That’s set up what could be a false breakdown and reversal with oil today trading above the December higher to $83.53.

The chart is somewhat reminiscent of bitcoin recently. It traded in a $21,000-$25,000 range for weeks before seeming to break lower in March. However it quickly reversed from $19,500 and blasted to $30,000 — a more than 50% rally.

Could oil do the same?

I think 50% is out of the question for now and certainly not with bitcoin-like speed but a failed breakdown is a powerful signal and particularly strong when there’s a fundamental change, like an OPEC cut. In addition, this week there’ finally been clear evidence that Russian exports are actually falling. Add in the fading banking crisis and strong aviation demand and there’s a chance to see the Q4 high of $93.74.

I’ll be watching US and Chinese consumer data in the days ahead but oil supply numbers will be equally important. Today’s EIA report showed some looseness but that was after three weeks of strong drawdowns.