WTI Crude Oil

Short-Term Oil Elliott Wave Analysis

Published 18th July 2018

Crude oil is likely to remain within the pale green trend channel to the upside. There may be some diagonal forming in the oil Elliott wave structure. It could be either a leading or an ending diagonal. Moreover, an expanding and contracting variation of both diagonals is possible at this point. We have depicted both scenarios in our very first chart below. Another leg on the upside follows within the black scenario whereas the red scenario depicts a cycle turn at the beginning of July 2018.

We assess the highest odds to the black scenario. Moreover, the second highest odds scenario is actually that minor wave 5 of the black scenario only completes minor wave 1 and extends to the upside. This scenario is not depicted on our very first chart below. However, it is depicted on the other charts further below.

The red scenario stands at lower odds for us. However, it is perfectly possible. We depicted it graphically to raise our awareness that the party could be over already. Sentiment and positioning are at elevated levels, which suggest that we are near a cycle turn in crude. The current swing down from the July high counts as a three-wave corrective move to the downside right now. Odds would shift towards the red scenario if the current swing morphs into a motive wave!

Published 11th July 2018

The June advance counts better as a 3-wave advance to the upside. It may be tracing a fourth wave currently. The magnitude of the current correction may provide us further hints regarding the degree of the fourth wave and whether we are dealing here with a potential ending diagonal or not.

All in all, we expect crude to continue its drift to the upside. The analysis further below remains valid.

Mid-Term Oil Elliott Wave Analysis

Published 4th July 2018

It is too early to tell but crude may hit a cyclical high rather sooner than later. The oil complex may have risen too fast and lost its strength consequently. The green trend is not as sharp and steep as the blue trend. Both are separated by a very shallow correction. The correction occurred in early 2018 and we label it as wave (B). To subsequent rise (Feb 2018-May 2018) looks and counts slightly better as a 3-wave advance. That could be the initial setup of two similar patterns. It is either a leading diagonal, which resolves as the black scenario or the beginning of an ending diagonal as depicted by the red scenario.

We will probably get further hints regarding this after the next correction (3-wave pullback). We expect a shallower correction within the black scenario. Most important, the black scenario counts as a 3rd of 3rd after the next down sequence. A very strong push to the upside results most often during that stage. The green trend channel should get broken to the upside if the black scenario plays out. On the contrary, the green trend channel will act as resistance if the red scenario plays out. This 3-wave upside action fading near trend resistance will be a strong indication that we are dealing here with an ending diagonal.

It is too early to fully embark on either scenario right now. The key takeaway is that the next pullback most likely results in a good bullish entry opportunity. Complacency among market participants rather supports the red case as we publish this. Sentiment gauges point to bullish expectations and positions among market participants. It would be slightly surprising if those conditions cool off significantly after the next correction.

Long-Term Oil Elliott Wave Analysis

Published 15th November 2017 

Price action has been exciting over the past couple of decades. WTI increased 15-fold from its levels in the late 90’s and had two magnificent crashes thereafter. We see crude oil to behave further in a complex manner. Mid-term, our Elliott wave analysis projects significant upside from the 2016 lows.

Long-term, there may be another few decades with crude oil in a trading range between $25 and $150. The sideways pattern makes also a fundamental sense in a time when electric cars are waiting for their breakthrough and gas or alternative fuels compete with crude oil as an energy source.

Technical Analysis