Crude Oil prices slide further to continue the bearish run that started in September. Price patterns show emerging impulse waves are ongoing.
October 15, 2019 | AtoZ Markets – The energy market has been on the downside with Crude Oil prices sliding. From mid-September to October 3, Crude Oil prices dropped quickly. This was on the back of an attack on Saudi Oil facilities. WTI crude oil dropped from $63 to $51 – 19% slump. In the same period, Brent Crude Oil price shed $13 to hit $57 – 19% decline as well. However, since October 3, there have been recoveries albeit shallow. Meanwhile, the bears are back after the 7% recovery was not enough to push the prices away from the bearish zone. It now looks highly likely that prices will drop below the October 3 low. Afterwards, a bullish correction should follow.
Crude Oil prices: technical overview
This technical outlook below is based on the Elliott wave theory. It’s clear that similar patterns are emerging on the two Crude Oil benchmarks.
WTI Elliott wave analysis
The chart above shows the Elliott wave analysis of the west texas intermediate (WTI) crude oil. It is clearly exhibiting the properties of a bearish impulse wave from $63. This is a continuation of the last update. Wave iv is probably ending at $50 which lays between the 38.2%-50% Fibonacci retracement of wave iii. Wave v has started already. The 4th wave usually corrects around the 38.2% Fibonacci retracement of the 3rd wave. This scenario perfectly fits in. There are minor support levels at $53 and $54 which have already been invalidated. $50.5-$51 now remains the major support zone. However, wave v is expected to breach below this zone unless it will be truncated. $47-48 is the next bearish target zone.
Brent Crude Oil analysis
If WTI goes with the technical analysis above, it shows Oil prices will continue to decline this week and probably next week. An exact scenario is playing out on the Brent Crude Oil chart. In the last update, we expected the decline to continue below $55. The new chart below shows an update on that.
Brent Crude Oil is playing out exactly as WTI. Wave (iv) is returning just below the 50% retracement of wave (iii) at $61.30. A further decline below $56.9 low is expected. The bearish target for the Brent is around $52-54 where we have the 61.8% Fibonacci projection of wave (i)-to-(iii) from wave (iv). If the price goes as expected, we will look forward to a 3-wave bullish correction for the Brent and WTI Crude. In addition, the 5th wave in both cases should drop significantly below the 4th wave channel to confirm this scenario. Otherwise, a surge above the 4th wave highs will invalidate these expectations.