close icon

Crude Oil Shows Why Alternative Counts Matter

Trade war fears are officially back, causing indiscriminate selling of stocks and commodities alike. Crude oil has been hit especially hard as supply glut worries are also beginning to reemerge.

Crude oil closed at $53.34 a barrel last week, but this selloff was triggered by the breach of a key level in the week before that. The drop from $66.58 looked like nothing more than a regular pullback. However, the alternative count below, sent to subscribers on May 20th, revealed a much more bearish possibility as well as the key level whose breach would trigger it.

Crude oil triggers alternative Elliott Wave setup

While the decline from $66.58 to $60.02 could be seen as a three-wave sequence, implying the uptrend is still in progress, it could also be a bearish leading diagonal pattern. Being objective meant we had to keep both possibilities in mind.

Nevertheless, every alternative count needs a specific level to activate it. In the crude oil’s case, that key level was the bottom of wave B at $60.63. As long as the price stayed above it, there was still hope for the bulls. But if $60.63 gave up, it would mean much lower levels can be expected. Then this happened:

Crude oil slumps after bearish breakout

The upper line of the corrective channel discouraged the bulls and caused a bearish reversal from $63.79. On May 23rd, the price of crude oil fell below $60.63. This told us that the bulls have officially been defeated and that it was time to join the bear camp. A week later, crude oil closed at $53.34 a barrel.

Trade wars, supply imbalances, sanctions, embargoes. The news will never stop pouring and finding your way in the labyrinth they form will always remain next to impossible. Technical analysis, on the other hand, offers a much simpler way of dealing with market uncertainty. Sometimes a bullish and a bearish outlook accompanied by a key level to divide them is all a trader needs.

What will WTI Crude Oil bring next? That is the subject of discussion in our latest premium analysis! Order and receive TODAY!

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Crude Oil Reaches Bullish Target Amid New Lockdowns

COVID-19 returned with a new force in Europe after the warm summer months. Countries around the continent have entered new lockdowns in an attempt to curb the virus’ spread. The situation in the U.S. has never been worse with roughly 200 000 cases per day. But unlike during the first wave of measures, crude oil…

Read More »

Crude Oil – The Elliott Wave Reason for the Reversal

At the start of last week crude oil was trading at less than $36 a barrel. It was down from $43.84 in August and from $41.91 on October 20th. Fortunately, Elliott Wave analysis helped us prepare for this selloff in advance. So, when the weekly session began, the price of crude oil was down 14%…

Read More »

Crude Oil Bears Make the Most of Their Time to Shine

After the market broke during the pandemic panic and crude oil prices fell into negative territory, a quick and sharp surge followed. WTI climbed to $43.84 a barrel in late-August. But the crisis was far from over and the Elliott Wave principle helped us correctly predict the bearish reversal that came next. Now, crude oil…

Read More »

Crude Oil Gave Bulls a Clear Warning Before it Dropped

It’s been a bad couple of weeks for crude oil bulls. The price had been steadily climbing for months, up over 300% since late-April. In the last days of August, WTI crude oil reached almost $44 a barrel. By September 8th, however, the price was below $36.50. This 17% drop can be explained with the…

Read More »

Bullish Crude Oil Bet Pays Off Against All Odds

When it comes to the crude oil market, last month was one for the history books. The coronavirus pandemic forced the global economy to grind to a halt. This led to a sharp decline in oil consumption, while production was too slow to adapt. As a result, there was plenty of oil nobody wanted as…

Read More »

A Pattern + Drone Attacks Equals an Oil Price Spike

The price of WTI crude oil spiked at the open on Monday, following drone attacks on Saudi Arabian oil facilities over the weekend that practically cut the kingdom’s output in half. How long will it take for output to be restored and is the situation going to escalate from here remains to be seen. The…

Read More »

Crude Oil Bears Needed a Spark. Trump Threw a Bomb

The price of crude oil recorded its biggest daily decline in four years Thursday after President Trump threatened to impose new tariffs on $300 billion worth of Chinese goods. The U.S.-China trade war has been unfolding during most of Trump’s presidency. With the 2020 elections approaching, many thought a trade deal might be in the…

Read More »

More analyses