Bottom line: WTI Crude could be preparing for a counter trend rally towards 58.00 levels. The intermediary bullish structure remains intact until prices stay above 43.88.
Technical Analysis:
WTI Crude remains firmly in control of bears in the medium to long term after having completed a 5 wave drop from 65.62 through 43.88 levels respectively. The most probable wave structure from here is that of a 3 wave counter trend rally a-b-c, towards 58.00 levels at least. Please note that the Fibonacci 0.618 retracement of the entire drop between 65.62 and 43.88 is also seen around 58.00 and a bearish reaction there is high probability. Most traders might be looking to cover short positions taken earlier and remain flat or might be looking to initiate aggressive long positions with protective stop below 43.88 and projected target towards 58.00 respectively. Also note that WTI Crude has produced an Engulfing Bullish candlestick pattern on the daily chart after printing 43.88 lows, indicating a potential reversal. Immediate resistance is seen at 54.50, and a break higher would confirm further push towards 58.00 going forward. The overall structure since the 76.88 highs also looks to be constructive for bearish setup. WTI Crude had dropped from 76.88 through 42.40 levels in 5 waves labelled as Wave (1). This was followed by a flat corrective wave terminating around 65.62, labelled as Wave (2) here. At this moment of writing, WTI Crude is probably unfolding Wave (3) lower and a lower degree Wave 1 could be in place at 43.88 levels respectively. We are now anticipating a corrective rally to push higher and terminate around 58.00, as Wave 2 before the drop could resume further. One can expect intraday dips towards 45.80/90 from here, but it could be seen as an opportunity and traders might be willing to initiate longs there.
Prepared by
Harsh Japee, Technical Analyst.
WTI Crude Chart
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