Bottom line:  WTI Crude bearish structure remains intact with 65.62 resistance in place. A much anticipated counter trend rally should reach 55.00 and 60.00 levels respectively.

Technical Analysis:

WTI Crude remains firmly in control of bears after having produced an impulse wave from 65.62 through sub 49.00 levels. We can clearly count 5 waves drop and hence the first impulse could be already in place at 49.42.  WTI Crude should be preparing to produce a 3 wave counter trend rally towards 59.50 levels, which is also fibonacci 0.618 retracement of the earlier drop. The counter trend rally could be wave 2 within the anticipated 5 wave drop from 65.62 of a larger degree. Traders might be preparing to take profits if short positions taken earlier and remain flat during the counter trend rally. Aggressive traders might take this as an opportunity to go long with protective stops at 49.00 and projected targets towards 59.00 respectively. Please note that trading opportunities might be seen on both sides but one might choose to go according to the risk appetite. Looking at the overall wave structure, WTI Crude seems to have produced larger degree Wave (1) and (2) on the lower side. The drop between 76.88 and 42.40 was an impulse labelled as Wave (1) here. The subsequent structure could be seen as a flat A-B-C, labelled as Wave (2) terminating at 65.62 levels. If the above counts are correct, prices should remain below 65.62 and push far below 42.40 levels as Wave (3) progresses. Looking into the sub waves within Wave (3), Wave 1 seems to be in place at 49.40 levels. We are now expecting a Wave 2 rally towards 59.50 levels before the 3^rd of 3^rd wave drop could resume lower. Conservative traders might be willing to remain flat during the counter trend rally.

Prepared by

Harsh Japee, Technical Analyst.

WTI Crude Chart

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