Oil – Weekly Analysis
In July, oil triggered a rare and powerful technical signal—one that has occurred only five times in history, with the most recent instance in 2014. As promised, we’ve run a comprehensive statistical study to assess its potential implications. The numbers are in, and the message is loud. This signal has historically preceded major moves—let’s break down what the data is revealing and what it could mean for oil in the weeks and months ahead.
CANDLES
Oil had an opportunity to launch a rally and initially responded well to the Bullish Engulfing on Thursday, surging higher. However, the momentum quickly faded, leading to a bearish daily and weekly closure. Now, a bearish combo is forming on the 8D frame and could be confirmed on Monday. Meanwhile, the monthly candle is shaping into a possible Falling Three Methods pattern, while the price slips below the 100-month moving average—an important long-term support.
At this point, the odds remain firmly bearish unless a strong reversal signal emerges.
8/20 EMA Quarterly Cross
The 8/20 EMA bearish cross on the quarterly chart is on track for confirmation at the end of September—and historically, this signal has been anything but mild. With only five previous occurrences, each led to major declines ranging from 36% to 70%, with an average drawdown of 53%. If history rhymes, the statistical target for this move falls within the marked rectangle, with the average pointing to around $33.
This suggests the bear market in oil may persist for another 1–2 years. Tough news for oil investors—but potentially a tailwind for broader economic stability.
ELLIOTT WAVES
Last Wave
As oil failed to develop an impulsive move upward, wave c of (b) is now likely complete as an ending diagonal—this development significantly reduces the odds for the purple count. Instead, the probabilities have shifted in favor of the blue and red scenarios. The key takeaway: regardless of the exact path, lower prices remain the most probable outcome.
Possible Classical Flag
Summary:
Oil remains firmly bearish on the mid- and long-term frames. In the short term, a horizontal corrective move is still possible, but the dominant trend points lower. With a series of escalating bearish signals already in place, the outlook favors a continued bear market that could last for several quarters or even years.
Happy Trading!
