Oil – Weekly Analysis
Oil bulls face a task of Herculean proportions. If they fail in the next two days, the consequences could be dire. Let’s chart the levels and evaluate the potential damage. If you read the statistical study from September 18, you’ve been at least psychologically prepared. Let’s discuss the latest signals and probabilities.
CANDLES
On Tuesday, oil will close the 15D, monthly, and quarterly frames with bearish continuation candles. Unless it rallies at least 8% over the next two days, we should prepare for a continued decline. The weekly failed to form a bottom after being rejected at the required level. The daily candle was rejected at the 200 DMA and is far from bullish.
The odds are bearish across all frames, and the chances of flipping to the green side are slim.
8/20 EMA Quarterly Cross
(from the Jul 18 analysis, refreshed chart)
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.
Calculations suggest oil needs to rally about 10% (or more) over the next two days to prevent the cross. This requirement aligns with the candlestick evaluation.
ELLIOTT WAVES
Last Wave
It looks like wave ii is complete as a perfect flag.
Classical Patterns – Flags
Summary:
Oil is bearish across all time frames. The probability of reversing the long- and mid-term odds in the last two days of the month/quarter is minuscule. Based on the flag geometry, the ideal target is $51.30. The 100/200-DMA cross statistics suggest about $51.00. MACD-cross stats point toward ~$33, with a range of $20–$46. We should prepare for a big bear ride toward $51 or lower over the next few quarters, or even years. Let’s see whether the September closure confirms this hypothesis.
Happy Trading!
