Bottom line: WTI Crude bearish structure remains intact for now as it hits initial Fibonacci extensions below 28.00. Corrective rallies are possible from here but downside potential remains.
Technical Analysis:
WTI Crude remains bearish against 55.00 levels, but could soon be approaching a major support just below the 26.00 mark. WTI Crude is very close to completing a corrective zigzag wave that had begun since 147.00 levels in 2008, according to the weekly charts. We present the larger degree corrective wave counts below. The drop between 147.00 and 33.00 was an impulse, and the first wave of the corrective decline. The subsequent rally was in 3 waves between 33.00 and 114.00, the second wave of the correction. The last wave within the zigzag correction had potentially resumed from 114.00 and has already terminated waves 1, 2, 3 and 4 at 75.00, 112.00, 26.00 and 76.00 respectively. The chart displayed here is since 76.88 highs and it is the 5th wave in progress. It is expected to print below 26.00 levels and complete the multiyear corrective drop in WTI Crude before turning higher again. If we further sub divide the wave counts since 76.88, Waves (1) and (2) has terminated around 42.40 and 65.62 respectively. Since then Wave (3) seems to be in progress and might have terminated below 28.00 yesterday. Going forward, downside remains limited for the entire corrective drop to complete and WTI Crude turning bullish thereafter. Traders might be willing to take some profits on the short positions initiated earlier and remain flat for a while. The commodity might print yet another shallow low below 26.00 levels and reversal sharply. Watch out for bullish divergences on the 4H and Daily time frames accompanied with fresh lows, that could be a potential signal to initiate longs again.
Prepared by
Harsh Japee, Technical Analyst.
WTI Crude
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