Oil – Weekly Analysis
On September 28, we issued a major warning and a road map. Fast forward to October 10, and oil is 13% cheaper than its most recent peak. But that is history now—the main question is the next turn, which we will discuss today.
CANDLES
Oil closed the week with bearish continuation candles. However, the commodity is extremely oversold on all hourly frames. For example, the RSI on the 1-hour frame is around 10—the lowest in the last three years. Given these technical conditions, oil is expected to pull back or at least consolidate on Monday–Tuesday, and we will monitor the signals. At this point, no strong reversal signal has been recorded.
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 closes. Momentum, trend structure, and candle sequencing all lean lower, keeping the dominant path to the downside intact. As all frames smaller than the daily are grossly oversold, oil is expected to bounce or at least consolidate early next week. At this point, no strong reversal signal has been recorded. The Monday–Tuesday closing prints are expected to be pivotal for the next move.
Happy Trading!
