WTI Elliott Wave Analysis: Navigating the Current Bearish Impulse

Function: Counter-trend

Mode: Corrective

Structure: Zigzag

Position: Wave (iii) of 1

Direction: Active

Details: In our latest update, we examined two possible outcomes. The breach of the 84 level has confirmed that wave (B) has concluded. The ongoing rapid decline suggests the commencement of a bearish impulse in wave 1, expected to persist barring unforeseen developments.

WTI's Recent Market Movements and Elliott Wave Implications

In recent trading, WTI has experienced a substantial drop, decreasing by nearly 7% from its peak in August 2024. This sharp decline is characteristic of an impulsive wave, indicating an end to the previous four-month bullish correction or perhaps signalling a corrective phase within the broader trend. Given the data from higher time frames, it appears more likely that we are witnessing the end of the bullish phase.

From a broader perspective, WTI is adjusting to a significant impulse wave that spanned from April 2020 to March 2022, a period marked by considerable resilience in the face of COVID-19 pandemic challenges. The correction that began in March 2022 is still in progress, with the potential to drop to the $46-$50 range according to current projections.

Daily Chart Analysis: Double Zigzag Correction

The daily chart provides a comprehensive view of the ongoing correction, revealing a double zigzag structure labelled as blue wave W-X-Y. Waves W and X were completed at points 64.5 and 95, respectively. Currently, wave Y is in motion, marked by blue circles and characterized by a zigzag pattern. Wave (A) of Y ended at 67.81, succeeded by an upward movement in wave (B) that peaked at 87.67, forming a double zigzag. This setup suggests that another zigzag or double zigzag for wave (C) of blue Y is likely, potentially breaking below the 64.5 threshold in the long term. If this break does not occur, the market could still see a minimum three-wave decline to around 75. The primary focus now shifts to the ongoing bearish response, with particular attention on the H4 chart updates.

H4 Chart Focus: Anticipating the Downward Impulse

The H4 chart analysis centres on the expected continuation of a downward impulse to complete either wave 1 or A, which could also encompass the initial sub-waves of these sequences. At this stage, the specific wave degree might be less critical than the overall price movement pattern. If the price action aligns with the anticipated bearish impulse, we can expect a corrective rebound, potentially providing a strategic opportunity for those looking to enter selling positions. The key level to watch is 87.63; as long as the price remains below this marker, the outlook for continued declines in the short term remains strong.

Technical Analyst: Sanmi Adeagbo

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Conclusion and Strategic Considerations

As WTI progresses through these critical phases of its Elliott Wave pattern, traders and analysts should remain vigilant, monitoring price movements closely for indications of the next major movements. The current setup offers a blend of strategic entry points and cautionary signals, essential for navigating the volatile oil market effectively.