WTI Crude Oil Technical Analysis and Short-Term Forecast
The near-term outlook for WTI remains bearish. Originally, it looked as though the move down from $67.79 was unfolding as a five-wave pattern that targets $54.9 or, more likely, $53.7. However, Waves I and III lack clear five-subwave counts. This does not negate the possibility of a five-wave move, but it does imply that the decline might be a three-wave extension that targets $52.5 instead. Nonetheless, in either case, the wave count, whether five- or three-waves, calls for the decline to continue toward targets in the low $50s.
As a five-wave move, $57.0 is crucial because this is the smaller than (0.618) target of Wave III and connects to $53.7 as the equal to (1.00) target. The $53.7 objective is also the XC (2.764) target of Wave I and the lowest that this wave projects. The trend terminus for Wave I is $54.9, but $53.7 makes more sense for the five-wave move because falling to $53.7 would makes Waves III and V equal. This also means that $53.7 would be the most probable stalling point for a five-wave pattern. Therefore, once $53.7 is met, a three-wave correction, or more, would be expected.
As a three-wave extension, the decline from $67.79 targets $56.3 as the smaller than target and then connects to $52.5 as the equal to target. Therefore, a three-wave extension is a bit more bearish for the near-term outlook than a five-wave pattern.
Tomorrow’s early action should shed more light on the wave count. Currently, it looks like the decline is more likely a three-wave extension because the subwave down from $62.04 has taken out its smaller than target and calls for a test of its $56.3 equal to target. However, should $57.0 hold and a decent retracement takes place (along the lines of $1.50 to match the retracement from $58.47 to $59.98), the decline is probably a five-wave trend. Again, either way, there is a good chance for WTI to fall and fulfill targets in the low $50s in the coming days.
Regarding near-term resistance, look for $58.4 to likely hold. Key near-term resistance is today’s $59.5 midpoint. Settling above this will dampen near-term odds for a continued decline and call for a test of $60.2 and possibly today’s $61.3 open before the decline continues.
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