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 closed Friday with bearish continuation candles on the daily and weekly frames, signaling a continued move lower. The commodity is now very close to a critical monthly level: a close on November 28 below October’s low will likely open a path to lower lows. If oil instead holds that level and closes above it, the month will form an Inside candle, which would carry higher odds for a bullish path.
Overall: short and mid term — bearish; long term — bearish so far.
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
No news in the EW department. Oil remains in an inflection zone, awaiting a directional signal. A break below 55.955 (October’s low) will invalidate the red count and sharply reduce the probability of the blue, prompting a reevaluation of the outlook.
Summary:
The last three days have flipped the narrative significantly. Oil is bearish across the short- and mid-term frames, with a fair chance of extending the bearish odds onto the monthly frame. The October low has become a key level to watch — a November close below it will open a path to lower lows. A break of this level will have a strong impact on our current EW structures and will prompt a reevaluation.
Overall: short and mid term — bearish; long term — bearish so far.
Happy Trading!
