close icon

Elliott Wave and Oil’s Strong Come-Back

It was a roller-coaster week for crude oil prices. The market moved sharply up on Monday, September 5th, climbing to 46.51 during the European session. Then is suddenly fell back to 43.82. And just when it looked like the downtrend has resumed, the bulls returned to take oil to 47.72 on Thursday, September 8th. These violent developments made it necessary for us to send an intraday update to our crude oil premium clients on Tuesday, September 6th. Here is the chart they received that day.
oil-update 6.9.16
Elliott Wave analysis works best, wen there is a clear pattern. The chart above shows that the rally from 42.98 to 46.51 is a clear five-wave impulse with an extended fifth wave. In this respect, the weakness to 43.82 was the natural three-wave retracement, which follows every impulse. According to the theory, as long as the invalidation level at 42.98 was intact, crude oil prices could have been expected to start recovering and eventually climb above the top of wave 5 of the impulsive sequence at 46.51. Today is Friday and the week is almost over. Let’s see if the above-shown forecast has done any good.
Fifth waves are usually fully retraced. This means we could have predicted that the a-b-c correction is going to be a little deeper. Our mistake. However, the critical level at 42.98 was never threatened and despite the bears’ persistence, the positive outlook remained valid. Just two days later, crude oil was already hovering around 47.70, thus once again proving the Wave Principle’s value to traders. Besides its predictive abilities, it also provides specific price levels to serve you as a map and tell you if you are on the wrong track. Just as you should not go on a road trip without a GPS, you should not enter a trade without a map of key price levels. Or you risk getting lost somewhere in the market swings.

Stay informed with our newsletter

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

Privacy policy
You may also like:

Ahead of the 14% Crude Oil Dive with Elliott Wave

The crude oil market is capable of going from a state of oversupply to one of not enough supply in relatively short time. OPEC and Russia’s decisions and the fact that in a normal year the world consumes over 100 million barrels of oil daily cause the pendulum to swing from glut to deficit quite…

Read More »

Chevron Stock Doubled in a Year, Can Go Higher Still

A year ago it seemed like all hell was breaking loose on the oil industry. Even oil majors like Chevron couldn’t escape the carnage. First it was the pandemic, which forced governments to close businesses and restrict travel. Then, the Russia-Saudi Arabia oil price war worsened the situation as the two countries failed to negotiate…

Read More »

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 »

More analyses