In Financial markets - the only thing that counts: Trend. Trends persist for long long time...sometimes years.
One of the dominating trend that started in 2014: Strong Dollar and Weak Commodities especially Crude and Gold. Here's what happened to Brent Crude in 2014
I remember on the way down: very few people accepted it as trend. Majority of folks were busy calling bottoms after every 10% decline. I was not that optimistic on Crude because I knew Crude is headed for big decline. Sometimes, acceptance of the trend solves all the problem and one stops fighting it
Once the trend is in place: the next thing that happens: asset bounces and forms a resistance (some high) and then that becomes barrier for long time to come. That's what precisely Brent Crude did. It bounced from lows to 68 and created a new resistance for Brent. Now the new trade: Short between 65-68. Has Crude found a bottom? I doubt it. When a trend is in place, the last thing one should do: Look for top/bottom.
Market is always ahead of time. It prices the future. The downtrend started as a recognition that world is producing too much Oil, to now a confirmation that not only world is producing too much of Oil - but also there is very little Geo-politics risk (post Iran deal) to price in.
When asset is in downtrend: the only answer you know: Buying does not make sense. You have no idea how low asset can go.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers