Bottom line: WTI Crude continues to be in a corrective phase until prices manage to stay above the 49.40 mark. A potential zigzag could be underway towards 59.00 levels before it finds resistance and reverses lower again.
Technical Analysis:
WTI Crude had almost hit 55.00 levels before reversing sharply since February 20. 2020. The short term rally from 49.40 through 54.45 looks to be corrective (3 waves). This could the first wave A within an A-B-C rally expected towards 59.00 levels. Furthermore, the drop is seen to be stalling just above the 50.00 mark. This could be labelled as Wave B within the corrective phase. If the recent counts are correct, we could see a sharp rally unfold into 5 waves towards 59.00 levels, as Wave C progresses. Looking at the medium term wave counts, WTI Crude had dropped into 5 waves between 65.62 and 49.42 levels. Ideally a 5 wave movement should be followed by a 3 wave counter trend move, in this case on the higher side. If the above count holds, WTI Crude is expected to stage a rally to 59.00 at least, before resuming lower again. Looking at the larger degree wave counts, the commodity seems to be into its Wave (3) lower since 65.62 levels. Within the larger degree Wave (3) it has produced Wave 1 lower and is working on a Wave 2 counter trend since 49.40 levels. Please note that Fibonacci 0.618 retracement of Wave 1 is seen through 59.40 levels and hence high probability for Wave 2 termination. If the above medium term structure and counts are correct, Wave 3 could resume from 50.00/40 levels soon. Aggressive traders might be looking to hold long positions taken earlier and look up to 59.00/40 levels to take some profits.
Prepared by
Harsh Japee, Technical Analyst.
WTI Crude Chart
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