Crude oil is about to close this week bullish as prices rally above the previous October high. The following crude oil Elliott wave update share some insights.
October 25, 2019 | AtoZ Markets – Oil prices have surged above previous October high to continue the recovery from October 3. However, the rallies look corrective and the larger trend is still overwhelmingly bearish. Brent crude hit above the $61 previous high and currently trades near $62 per barrel. WTI crude likewise trades at $56 per barrel after it breached above the previous October high of $55. Technically, aside from the current surge being corrective, oil prices are close to strong Fibonacci resistance zones. Hence, prices might start falling soon to continue the September 16 – October 3 bearish run.
Crude Oil Elliott wave update
In the previous updates, we reckoned that the dip from September 16 to October 3 completed a bearish impulse wave. According to the Elliott wave theory, a 3-wave bullish correction should follow. Often times, we use Fibonacci retracement levels combined with critical support/resistance levels/zones to determine price reversal zones where a trend or correction might end. In the last update, as the charts below show, we measured possible price reversal zones for WTI and Brent. The following shows the Crude Oil Elliott wave update for both Brent and WTI.
WTI crude analysis
In the last update, we used the chart below.
We expected the bullish correction to end around $57 (50% Fibonacci retracement). Of course, the price might hit above to 61.8% or even 78.6% retracement levels. However, double zigzag corrections usually end around 50% as they are usually slow and shallow. In the new update below, we added the Fibonacci projection of the internal waves of the emerging double zigzag pattern.
WTI may advance to $57-58 where we have the first reversal zone (50% Fibonacci retracement of the impulse wave and 100% projection of wave w from x). If there is a reversal signal and the price drops below $55 (wave w high), the bearish trend will most likely continue to $48 or below. If the price breaks above the zone, the next reversal zone is $58.6 – $59. A similar structure is emerging on the Brent Crude chart.
Brent crude analysis
We used the chart above in the last update and expected a double zigzag pattern to complete between $62 and $63.5. The price is currently about entering into this zone as the chart below shows.
The first reversal zone is $62.8-63.5. If the price breaks above it, we will look forward to $64.9-$65.6 reversal zone. If the price breaks below $61.3 – wave (w) high, we should expect the bearish intermediate trend to continue to $50.