Bottom line: WTI Crude bearish structure remains intact until prices stay below 65.62 levels.
Technical Analysis:
WTI Crude remains in control of bears after having reversed sharply lower from 65.62 highs on January 08, 2020. Looking at the short term wave structure, the drop from 65.62 levels is seen to have unfolded into 3 waves. A 5 wave drop and a subsequent break below 50.50 range lows would confirm a bearish reversal and rallies are good to be sold after that. If aggressive shorts were taken from around 65.50 zones, it would be considered safe to take profits at current levels 52.86. Alternately, WTI Crude might be still unfolding into a complex correction and Wave C of (2) may print above 65.62 levels. This would complete an ending diagonal structure as Wave C would be looking to terminate above 65.62 levels before reversing. It is good to allow price action to unfold from here, before deciding further trade direction. Looking at the larger wave structure, the drop between 76.88 and 42.40 levels was an impulse, labelled as Wave (1) here. The subsequent rally has been a complex corrective structure A-B-C that terminated at 65.62 levels as a running flat, labelled as Wave (2). If the above counts are correct, WTI Crude would continue dropping further towards 50.50 levels sub dividing into 5 waves. Furthermore prices would hold below 65.62 going forward. Alternately, if Wave C is unfolding as a diagonal, prices would stay above 50.50 and push higher above 65.62 to terminate. It is a safe trading strategy to remain flat for now and wait for further price action to determine the next trade direction. A break above 56.00 would be encouraging for bulls and rally might continue to terminate above 65.62, going forward. Aggressive trade setup would be to go long now with stops at 50.00 and potential target above 65.62.
Prepared by,
Harsh Japee, Technical Analyst.
WTI Crude Chart
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