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Crude Oil price rally to 4 weeks high

Crude Oil price rally to 4 weeks high

Crude oil price rally to 4 weeks high amid US-China trade talks optimism. The following analysis includes the Brent and WTI technical analysis.

November 07, 2019 | AtoZ Markets – The markets are now looking brighter as investors risk appetite seems to have returned. Oil prices have risen in the last few days while the US stock markets hit new highs. This is largely as a result of the US and China maintaining an optimistic tone toward the trade deal. The two countries have agreed to cancel existing tariffs with the same proportion if the phase 1 deal is agreed. In addition, the Chinese commerce ministry recently maintained that the two parties are communicating and have high hopes that things will be resolved.

Meanwhile, Oil prices have gone higher. WTI hit above $57 per barrel for the first time since September 24. In a similar manner, Brent Crude hit $63.6 per barrel. However, the rally since October 3 still looks corrective. Prior to that, there was a sharp decline between September 17 and October 3 and price might just resume this trend once the current correction is over.

Read Also: EURUSD Fell for Three Consecutive Days

Crude Oil price rally – Elliott wave analysis

Technically, the respective rallies on Brent and WTI charts look corrective. In the last update, we expected the last week dip from October high to continue below the corrective channel. However, the dip was limited and supported by the baseline of the channel. Prices surge afterwards to hit new highs.

WTI Crude analysis

In the last update, we reckoned that a double zigzag corrective pattern had completed and the price should slump to continue the intermediate bearish trend. However, with the current situation, it seems the double zigzag pattern has morphed into a triple zigzag pattern as the new chart below shows (All charts are from TradingView)

Crude Oil price rally

The bullish correction from $51 is currently around the 50% Fibonacci retracement level. While there is more room for the correction to continue to 61.8% level just below $59, a price reversal pattern is emerging at the current level. The head and shoulder reversal pattern with the neckline at $56 could be the confirmation for the end of the bullish correction. Meanwhile, a break below $56 would be the necessary trigger. If the price instead invalidates the pattern, we should be off to $58-59.

Brent crude analysis

A similar pattern is emerging on the Brent crude chart.

Crude Oil price rally

Price has entered a strong Fibonacci resistance zone. A minor ending diagonal appears to be at the top of the chart around the 50% Fibonacci retracement level. If the price drops below $61.8, we will most likely see it fall further to $59 and below. However, it could still climb higher from the current level to the 61.8% Fib retracement level at $64-65.

Read Also: Gold Elliott wave analysis November 7 update

Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.

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