Bottom line:  WTI Crude holds its bearish structure, as Wave e of the triangle terminates around 61.31 levels.

Technical Analysis:

WTI Crude is looking poised to resume lower as Wave (2) terminates around 61.31 levels. We have adjusted the wave counts by keeping the triangle structure as discussed last week. Let us re-look at the overall wave structure again since 76.88 highs. The drop between 76.88 through 42.40 was an impulse, labelled as Wave (1) here. The price action since then can be seen as a triangle (constant support and decreasing resistance), that unfolded into 5 waves a-b-c-d-e respectively. Ideally, a decreasing resistance and constant support triangle is expected to break below the support levels, in this case the 50.50/70 zone. The triangle wave e, potentially terminated around the 61.31 mark, labelled as larger degree Wave (2) here. If the above counts holds true, prices should ideally stay below 63.33 levels and turn sharply lower as Wave (3) progresses. The potential price target for Wave (3) termination should certainly be below 42.00 levels. Hence, a high probable trade setup from here is expected to be on the south side, against 63.33, with potential targets below 50.70 and 42.00 respectively. Alternately, a failure to break below 50.70 levels could indicate that the existing bearish triangle view might not unfold as expected. The immediate count favors a bearish reversal until 63.33 resistance remains intact. Also note that WTI Crude has traveled up to fibonacci 0.786 of Wave d, converging with the dropping resistance trend line around 61.31 levels. Furthermore, an engulfing bearish candlestick pattern has also appeared on the daily chart, indicating a potential reversal ahead. A break below 58.00, immediate price support would confirm that bears are in control and could continue to print lower lows and lower highs, going forward.

Prepared by

Harsh Japee, Technical Analyst

WTI Crude Chart

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