WTI Crude Oil Commodity Elliott Wave Technical Analysis
WTI Elliott Wave Analysis
WTI Crude Oil is breaking out of a 15-month period of sideways, choppy price action and appears poised to make a new low, potentially reaching levels unseen since late 2021. This breakout is part of a broader long-term bearish phase that began in March 2022, when WTI peaked near $131. As the bearish trend resumes, traders are asking: how low can this leg of the decline reach?
WTI Crude Oil Long-Term Chart Analysis
In the long-term view, WTI entered a bearish corrective phase in May 2022 after reaching $130.91. This phase followed a strong bullish impulse that began after the COVID-19 crash, which saw oil prices sharply recover to their highest levels since the 2008 global financial crisis. The current bearish correction is unfolding in a double zigzag pattern, a complex Elliott Wave structure commonly seen in extended corrections.
The first leg of this correction, wave W (circled), ended in March 2023 when WTI hit $64.56. Since then, the price action moved sideways, reflecting indecision in the market. This period of stagnation concluded in August 2024, forming a triangle pattern, signaling the completion of wave X (circled). The breakout from this triangle indicates the start of the next phase of selling pressure, which could persist for several months as the market moves towards key support levels.
Daily Chart Analysis
On the daily chart, the triangle formation in wave X (circled) served as a consolidation pattern. The breakout confirms the beginning of wave Y (circled), the final leg of the double zigzag correction. Downward momentum is expected to pick up as wave Y progresses. Traders and analysts will keep a close watch on the smaller waves forming wave Y (circled) over the upcoming weeks and months. Considering the scope of the correction, WTI could revisit lows around or below $50 as the bearish phase continues.
H4 Chart Analysis
The H4 chart offers more detail on the early stages of this new bearish wave. The breakout structure suggests an impulsive decline for wave A of (A)/(W) of Y (circled), marking the start of a new downward leg. After wave A completes, the market will likely see a corrective bounce for wave B before resuming the downtrend. This offers short-term and medium-term traders opportunities to sell into the bounces, as the overall bearish trend remains intact. Selling corrective rallies could be particularly effective in this phase, given the strong downward momentum anticipated for wave Y (circled).
Summary
WTI’s breakout from the 15-month consolidation signals the start of a renewed bearish phase, likely aiming for new lows. The Elliott Wave structure points to further declines, with traders advised to watch for selling opportunities during corrective bounces. WTI could continue its descent toward levels not seen since 2021.
Technical Analyst: Sanmi Adeagbo
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