Oil – Weekly Analysis
In this Oil Analysis, we assess the WTI outlook using multi-timeframe candlestick patterns, trend structure, momentum signals, and Elliott Wave structures. We compare the near-term setup with the higher time frames and, if the tape suggests the current path is off, update the forecast accordingly. This is the roadmap for anyone trading oil.
CANDLES
Oil definitely did not want to be bearish. The weekly close produced a possible setup for a Rising Three Methods. The 2D frame formed a strong, technically supported bullish Harami, and Friday’s daily close was also bullish, probing the 50 DMA for the fourth time in the past month. While confirmations are still pending, the bullish case is gaining momentum.
Overall: short and mid term — neutral, leaning bullish; long term — bearish, with a fair chance of flipping bullish.
8/20 EMA Quarterly Cross
(from the July 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
Oil is still at an inflection point and has a real chance to complete an impulse of a higher degree—wave 1 on the chart. All it needs is to print a higher high before breaking below $59.135. If wave 1 in red completes roughly as charted, a full 1–5 sequence will be on the table next.
Summary:
Oil bulls have recently consolidated their efforts, and it shows across multiple frames from the daily to the 15D. There are several potentially bullish setups across these frames that currently have better bullish odds but are yet to be confirmed. If they materialize, oil could see a major lift—7–11% for the blue path and 10–15% or even 20% for the red.
From the EW perspective, oil remains at an inflection point, with roughly equal odds for the red and blue paths. Once waves 1 and 2 are formed, we should be able to better assess the probabilities for each.
Overall: short/mid term — neutral, leaning bullish, pending confirmation; long term — bearish with a risk of flipping bullish.
Happy Trading!
