Bottom line:  WTI Crude bearish structure should remain intact till prices stay below 65.62 levels going forward.

Technical Analysis:

WTI Crude remains firmly in control of bears with as an impulse drop is seen between 65.62 and 58.00 respectively. The above drop could be defined as a lower degree wave 1, within Wave (3), which is expected to sub divide into 5 waves lower towards 45.00. The short term structure reveals that WTI Crude should produce a counter trend rally (3 waves) towards 61.00/62.00 before resuming lower again. Hence, a high probability trade setup could be to sell on rallies through 61.00/62.00, with protective stops above 65.62, and potential targets around 45.00 and lower respectively. Looking at the overall wave structure since 76.88 highs print on October 03, 2018; WTI Crude has managed to produce a 5-3 classic Elliott Wave pattern. The drop between 76.88 through 42.40 was in 5 waves, labelled as Wave (1). Wave (2) unfolded as a flat a-b-c structure and seems to have finally terminated at 65.62 last week. If the above structure holds well, Wave (3) should unfold lower below 42.40 levels and prices should ideally remain below 65.62 levels. Looking further into the sub waves within Wave (3), lower degree wave 1 is in place around 58.00. In the short term, WTI Crude is expected to trade higher and produce a 3 wave rally to terminate wave 2 around 61.00/62.00 respectively.  This should pave way for the largest and sharpest drop as wave 3 of (3) pushes lower towards 45.00. Trading opportunities are seen on both sides and depending on the risk appetite one could go counter trend and towards trend respectively. Watch out for counter trend rally first towards 61.00/62.00, followed by a sharp bearish reversal towards 45.00 respectively.

Prepared by

Harsh Japee, Technical Analyst.

WTI Crude

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