Oil – Weekly Analysis
Another expected move from oil—down 7% in a week. If you acted on last week’s report, there was little to dislike. The real question, as always, is what’s next. In today’s update, we interpret the multi-frame signals, weigh the latest candle patterns against key levels, and map the most probable paths from here, including the conditions that could revive the bullish case or confirm a deeper pullback. We’ll lay out the scenarios and their probabilities within a clear risk framework.
CANDLES
Oil closed the week with a solid Bearish Engulfing, and if momentum holds, the 10D frame is likely to record a Falling Three Methods on Tuesday, extending the odds. The daily also appears bearish at first glance, but the last two candles closed at precisely the same level—potentially a Matching Low—which carries a fair chance of a bullish reversal, especially given divergences on multiple hourly frames. In other words, a short-term bounce would not be a surprise.
For now, oil is bearish across all frames, with a near-term bounce possible.
8/20 EMA Quarterly Cross
(from the Jul 18 analysis)
As we flagged in mid-July, oil was on track for a rare technical bearish event. On September 30, the 8/20 quarterly EMA bearish cross was officially recorded. It has occurred only five times before, and all previous instances 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.
It is also worth noting that the 50/100 quarterly MAs are about to flip bearish. There is no record of previous occurrences, but this one will likely reinforce the long-term bearish odds.
ELLIOTT WAVES
Last Wave
Some technicals signal that wave three of some degree is likely underway.
Micro Wave
At the micro level, oil may have completed wave (i) and could bounce for wave (ii). Another viable path is a continued decline that extends the current wave. After Friday’s daily close, there’s still no confirmation for either scenario.
Classical Patterns – Flags
Summary:
Oil remains bearish across all frames following the monthly and weekly closures. Momentum, trend structure, and candle sequencing all lean lower, keeping the dominant path to the downside intact. The daily frame is flashing early signs of a bounce—think potential Matching Low and short-term divergences—but those hints still require confirmation.
Happy Trading!
