When it comes to "fundamental" analysis of financial markets, one giant hurdle exists that makes it next to impossible to gauge where prices will go next: its total reliance on events outside the markets.
Wars and peace; economic reports; political news; you name it, it all goes in the pot. As a result, not only is the public constantly adjusting how they perceive these events, but also the events themselves are constantly changing.
In the end, "fundamental" analysis is like hitching your investment wagon to a famous pop star: One day they're signing autographs, and the next, they're serving jail time.
But don't take my word for it. The recent mainstream news items regarding crude oil say plenty on the constant flux of the "fundamentals":
- January 24: "Oil Rises On Iran Ban. The European Union agreed to ban crude oil imports from Iran starting July 1 to pressure the country over its nuclear program. The market is taking the embargo as a positive." (Bloomberg)
--VERSUS --
- January 25: "Crude Slips as Traders Reassessed Iran Embargo. The embargo doesn't take full effect until July 1... That's not going to be for months." (Dow Jones Newswire)
And --
- January 26: "Crude tops $101/B as Iran Mulls Halt to European Oil Sales. Iran retaliates by blocking passage of oil through the Persian Gulf, where tankers carry one-sixth of the world's oil exports." (Associated Press)
-- VERSUS --
- January 30: "A read on fundamentals are pushing oil prices into bearish action, as Iran decided over the weekend to hold off on a positive vote for a ban of oil exports to European countries." (The Street)
I rest my case.
That's not to say that there is a method of market analysis out there that's 100% consistent and reliable. When it comes to predicting the future, the best you can do is even out the odds by reducing the number of variables outside of your control. That's where Elliott wave analysis definitely outshines the "fundamental" approach.
Elliott wave analysis achieves this by examining the INTERNAL measures of a market's price chart, such as: the Elliott wave structure, Fibonacci retracement levels, time cycles, and a host of other valuable technical indicators.
Here at EWI, our
Energy Specialty Service does this every day for the world's major energy markets such as crude oil. For example, here's a January 30 intraday update that identified the Elliott wave pattern in oil in late December-early January as a leading diagonal triangle (some wave labels erased for this article):
According to
Energy Specialty Service, the price action in crude since then has laid the groundwork for "the most powerful" of all 13 known Elliott wave patterns -- a third wave.
The best part is, you can get instant access to
Energy Specialty Service's complete analysis of crude oil, including the one event that will be a "good indication" that prices are, indeed, on track for a powerful move.
EWI's intensive Energy Specialty Service brings you timely, actionable forecasts for crude oil, nat gas and other global energy markets. Editor and 30-year energy market veteran Steven Craig lives and breathes these markets all day, every day; let him show you what he knows.
When you subscribe, you also get instant access to lots of FREE extras: subscriber-only on-demand video courses, world-class educational webinars, and more – more than $200 value!