Oil: Longer Term Bullish

Technicals | Jun 23 2021

Bottom Line 22/06/21

Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: $57.29 / $51.52 / $44.55 (August 2021 Contract)
Resistance Levels: $78.37 /$88.25 / $99.84

[All prices WTI futures US$/bbl]

Technical Discussion

Reasons to remain bullish longer-term:
→ oversupply a major issue in the past yet this appears to be rebalancing in a post-Covid-19 environment
→ bounce off capitulation low in April 2020 has stayed robust to this point
→ Oil price wars between major country producers always remain in play
→ Elliott Wave count remains on track for higher levels being attained

Crude Oil remains in bullish mode. Last night we witnessed price popping higher yet again. This time into highs not seen since price started to capitulate to the downside back in April 2020. So this is clearly a positive. The Elliott Wave count we have been running with off the major lows is more and more looking like an impulsive move as well. Rather than just a corrective A-B-C type move. Price has now surpassed equality by a small margin (see chart and video) so this is certainly keeping the structures very robust indeed.

The wave-(iv) triangle pattern has now broken out to the upside, with its target aligned to $78.79. So if this is achieved it will break above stubborn resistance circa $78.38 which will continue to feed our bullish argument. It will also back the impulsive scenario that a Wave-(v) of 3 is now in motion to the upside. What this will mean longer term is that levels up towards $100.00 will be possible as part of the larger 5-wave pattern being proposed.

The scenario that will start to confirm all this will be price pushing well higher above resistance as part of the proposed Wave-3. With the Wave-4 then consolidating above the old resistance zone, with it then potentially reverting to support if it holds. This type of consolidation is regarded as bullish, with the breakout from there signalling that a 5-wave move north is going to be required before the larger cycle finally draws to a close. A multi-month process in the making as a minimum. We continue to like what see unfolding here.

Trading Strategy

Our trade recommendation has triggered in between reviews. So we are now long at $68.05 (August 2021 contract). Our initial stops were placed at $61.55, yet tonight we have raised our stop into some small profits circa $68.67. Let’s see if we can get some further upside follow-through from here.

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