Oil – Weekly Analysis
Those who acted on our July 31 alert—when we flagged oil’s monthly closure as bearish despite the green candle—are sitting comfortably. Oil has dropped over 9% since that call. Those who didn’t… well, that opportunity is gone.
In this oil update, we dissect the current technical landscape using candlestick patterns, momentum indicators, and Elliott Wave structures across multiple timeframes. We break down prevailing trends, pinpoint key support and resistance levels, and map out the most probable scenarios for oil’s next major move. Missing the next one could be even costlier.
CANDLES
This week, oil logged five consecutive red days despite strong intraday bullish attempts. The result—a very strong Falling Three Methods pattern on the weekly, with a looming bearish closure on the 10D frame next week and the potential for another monthly bearish signal in the form of a Bearish Engulfing.
As of now, oil remains firmly bearish. Not a single timeframe, hourly or daily, is oversold, leaving a high likelihood for the decline to continue.
8/20 EMA Quarterly Cross
(from the Jul 18 analysis)
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
Oil is possibly in the middle of wave iii down of some degree. While the purple target is the more likely next stop, the odds of reaching the blue target are steadily increasing.
Possible Classical Flag
Summary:
Oil has confirmed bearish reversal signals on both the daily and weekly frames, reinforcing the short- and mid-term downtrend. With momentum firmly on the side of the bears, there is now a strong chance that the bearish odds will extend to the 10D frame next week. All previously identified short- and mid-term downside targets remain valid, with price action steadily progressing toward them.
At this stage, there are no credible bullish reversal signals on any key timeframe. The technical landscape—spanning candlestick patterns, momentum indicators, and Elliott Wave structures—increasingly points toward the likelihood of a prolonged bear market, where rallies are more likely to be corrective rather than the start of a sustained uptrend.
Happy Trading!
