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Crude Oil Price Advance Appears Incomplete

Crude Oil Price Advance Appears Incomplete

Jeremy Wagner, CEWA-M, Head of Education


Crude oil price has been consolidating its recent gains. Market participants were recently excited as Russia talked about cooperating with OPEC’s output reduction scheme.

From a technical perspective, the pattern appears incomplete to the upside so there is room for more advance. This article will cover the Elliott Wave pattern. I discussed another bullish pattern for Crude Oil in the Q4 forecast.

The Elliott Wave pattern illustrates we are in wave (iii) of a five wave advance. This suggests a dip in prices for wave (iv) followed by wave (v) higher.

One of the facets of Elliott Wave that I enjoy is that certain wave distances can be estimated as the idealized pattern tends to display wave relationships.

One of those wave relationships is that wave 4 typically retraces 38.2% the length of wave 3. On the chart above, this price level measures out near 48.74. Therefore, a dip to 48.00 – 49.10 is a typical stopping point for the move that we can anticipate if this sell off continues. If the sell off transpires, it would be wave (iv). We will look to buy this dip, if it ensues.

One of the rules of Elliott Wave is that wave (iv) cannot overlap with wave (i) in an impulse. This implies the September 23 high is our critical level for bulls.

So long as we are above $46.53 then we can anticipate to buy a bounce near 48-49.10 with a target above $52.

We previously mentioned there is another pattern we are watching for crude oil prices. It is an inverse head and shoulders pattern. This pattern and a fundamental case for crude oil was discussed in the Q4 forecast. You can grab a copy here.

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

Follow me on Twitter at @JWagnerFXTrader .

See Jeremy’s recent articles at his Bio Page.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.