Crude Oil Market Technical Analysis
In June 2016 bulls were not in a position to keep Brent price above USD50/barrel. Let us see how this happened and what we should expect further from crude oil today trend.
We will start our review by looking at a monthly chart. The oil market historically witnessed 2 highs: in 2008 and 2012. However, the strong bullish trend opened more than a decade ago. In January 2002 anyone could buy 1 barrel of Brent at about USD20. That was almost a starting point of the Monthly uptrend. Let us have a look at the chart. Waves of the Monthly timeframe are drawn with aquamarine lines. The first momentum bullish A wave had been creating for 6 years and resulted in a sevenfold price by 2008.
This momentum was followed by the sharp B wave correction. The bears showed all their talents and had dropped the price from USD140 down to USD40 within 6 months! It seemed that some miracle kept the price from falling below USD40. If we compare strength of A and B waves, we could really doubt which force dominated then. But if we look at Awesome Indicator (AOx4) of the older timeframe (that is 4-Months for a Monthly chart), we will see this wave down was not supported by the older chart at that time.
At the end of 2008 Brent jumped up from USD40 thus giving a start for the 3rd wave or the C momentum wave. The 3rd wave in the classical Wave Theory should overcome the 1st one. The C wave up on the Brent market continued 3 years but failed to reach more than USD128 and became a truncated one. But it happened to be clear by 2015 only when the bears broke the blue slope channel. This milestone event also got support from the older 4-Months chart (see the older AOx4 indicator). It was then when the bears took charge of the forming down move that should be considered a new momentum A wave of the new bearish trend.
The A wave of the Monthly chart could be either a 3-wave or 5-wave structure on a smaller Weekly chart. The Monthly subwaves or Weekly waves are shown with the grey lines displaying A, B and C waves of the Weekly chart respectively: the A down in 2012, than the complex B correction through 2012-2014 followed by the C down till January 2016. And now we are witnessing another correction wave that is marked as 4. We think that the current move is exactly the 4th wave of correction within the Weekly chart. It could not be considered to be a starting wave of the new bullish trend until the older 4-Months chart gives us a signal on its Awesome Indicator (see AOx4 on the Weekly chart).
In the same time the 4th correction wave on the Weekly chart has not finished yet since a small recent down correction has not been reflected on the Weekly chart. If we take the Daily chart we could see that the A wave down has not finished yet as well. So, let us get down to smaller timeframes, say, 8-Hours chart.
Waves of the 8-Hours Chart are drawn with chocolate lines. The 3-wave bullish 8-Hours structure that started in January 2016 already finished as it was confirmed by a break of its respective slope channel and AO Indicator of the older 32-Hours timeframe (see AOx4 on the 8-Hours chart).
We may see that within the A wave down of the 32-Hours chart the bears formed the A wave down on the 8-Hours chart, then transferred a flag for a while to the bulls who made the complex B correction wave and now continue to move the price down within the C momentum.
So, let us summarize crude oil today trend on the Brent chart of different timeframes:
- Monthly: the A impulse down in progress
- Weekly: the 4th correction up in progress to be followed by the 5th impulse down
- Daily: the A impulse down is forming
- 8-Hours: the C impulse down is forming inside 3-wave ABC structure