Crude Oil Suggests A Reversal Down – Elliott wave analysis 

Crude oil is trading in a wedge pattern from end of June, which is known as an Elliott wave ending diagonal. We are tracking final stages of a sub-wave v of 5 being made, so be aware of limited upside, and a bearish reversal in sessions/days ahead.

Possible resistance/reversal area can be around $44.00.

Crude oil, 1h

On the daily chart of Crude oil we see energy in a strong recovery, up from 7.08 lows, which can be part of a bigger, bullish reversal. We see a higher degree wave A)/1) which can be in final stages with its structure, and can look for resistance, and a reversal into a wave B)/2) correction at the $44.0 level.

The relative strength index below the chart also suggests resistance and a reversal in days ahead.

Crude oil, Daily

An ending diagonal is a special type of pattern that occurs at times when the preceding move has gone too far too fast, as Elliott put it. A very small percentage of ending diagonals appear in the C wave position of A-B-C formations. In double or triple threes, they appear only as the final C wave. In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement.

Ending diagonal in an uptrend:

• structure is 3-3-3-3-3
• a wedge shape within two converging lines
• wave 4 must trade into a territory of a wave 1
• appears primarily in the fifth wave position, in the C wave position of A-B-C and in double or triple threes as the final “C” wave

Disclosure: Please be informed that information we provide is NOT trading recommendation or investment advice. All of our work is for educational purposes only.

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By Gregor Horvat

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