This week WTI made a fantastic weekly candle, Bullish Engulfing. However, a few signs suggests that the correction is not over. Let’s have a look into details.
The monthly candle has a good chance of forming a Bearish Engulfing. In order to avoid it, WTI needs to close above $73.50 or, in other terms, add 7% in the next 2 days.
In this position, any closure either below or above $73.50 would make a bearish candle of various odds. Let’s see what oil can do until August 31.
The weekly candle is a strong Bullish Engulfing and it looks like it has bullish odd on its side. However, I find is interesting that the price stopped just 3 pips below the 8w EMA line. The other indicators are not fully supportive of the complete reversal.
While higher prices are expected the next weeks, a closure above 8 EMA, better 20 EMA is required to declare the mid-term rally.
The daily candles support a continued short-term rally. We need to see a continued closure above 8 EMA and an 8/20 EMA cross to confirm the rally on the daily frame.
Indicators are more bullish than bearish.
ELLIOTT WAVES + FORECAST
From the EW perspective, while the wave marked A-B-C in red on the daily chart has almost ideal proportions of a zigzag, I am not convinced that it is the end of the correction. The last waves of corrections should be either motive waves or diagonals. Wave C is neither. I believe that the first wave down was just the first wave of a much longer correction that I projected in blue counts. If this is the case, wave (B) could take September and October to develop.
Another possible option would be that wave C (red) continues further down as a diagonal/wedge. This one is less likely and I did not put it for now on the chart.
The last two days of August will be very critical for forming the monthly candle that would provide more information for the mid- and long-term forecasts.
As at this point the direction is not finalized and it’s difficult to forecast any targets until it is known.