It would be quite fitting for a Wave B high to set on geopolitical tensions. The tensions themselves have created a great deal of hype regarding $200 oil price and higher on price spikes. The Wave B model on the weekly chart anticipated weekly crude oil prices topping near the 70% retrace to the May 2011 high (~ $103) as the May 2011 high topped near the 70% retrace to the 2008 yr high.

Thus far, the Q4 11 and Q1 2012 highs are struggling to sustain a breach $103. The daily chart shows the rally off the Oct 4 2011 low exhausting on Jan 4 2012 just above $103. The trend remains bullish in crude oil on the daily charts. But those that are bullish the energy sector and crude oil specifically should be monitoring crude oil's ability or non-ability to breach $103 in 2012. The daily chart shows short term daily averages (of 13, 26, and 39 days) supporting $99, just above the year close at 9883. A bearish cross below the these key averages and unchanged on the year at 9883 is a signal that the Iran premium may be coming out of the market. If Mueller is correct, and prices fall a great deal when the Iran situation calms down, it is possible to see crude oil falling back to their May 2010 yr lows around ~$64 as this is ~ where Wave C = Wave A in price.

In fact, Crude oil price could be kissing their May 2010 yr lows in May 2012 if the ABC pattern plays out from a Jan 2012 high near $103.... Think of it as a possible Two Year Anniversary Kiss.

Click on image to enlarge!

For more from John Bougearel, visit Structural Loginc.