WTI Crude Oil
WTI’s corrective wave formation still calls for $67.0. However, today’s high of $66.7 was in line with the upper trend line connecting the $65.69 and $66.24 swing highs. It is also becoming clear that the move up forms a bearish flag. Therefore, while there is still the threat of testing $67.0 and possibly $67.7 (confirmed double bottom’s target), near-term odds have shifted back in favor of a continued decline.
Tomorrow, look for a test of initial support at $65.8, a move below which would call for the flag’s $65.0 lower trend line to be challenged. Settling below $65.0 would be quite bearish and open the way for $64.1 and lower.
That said, a move above $66.5 before prices fall to $65.8 would call for $67.0 to be challenged. Resistance at $67.0 is expected to hold due to the confluence of wave projections and retracements at that level. Settling above $67.0 would call for $67.7 and possibly higher, though this would likely indicate a significant bullish shift in external factors.
Brent Crude Oil
Brent’s near-term outlook is still weaker than WTI’s and has more downside room to extend since WTI led the move down in late May. Brent’s wave down from $77.61 is in position to challenge at least $75.0 and likely $74.5 tomorrow. The latter is most important because it is the 50-day moving average, a close below which would call for a new low of at least $73.7 and eventually $73.1.
Resistance at $76.5 is expected to hold, though the key level for the near-term is $77.3. A close above $77.3 would call for the most important near-term resistance at $77.9 to be tested.
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