Crude Oil: Longer Term Higher

Technicals | Jul 20 2022

Bottom Line 19/07/22

Daily Trend: Up
Weekly Trend: Down
Monthly Trend: Up
Support Levels: $90.00 – $80.00 / $62.29 (August 2022 Contract)
Resistance Levels: $123.95 / $128.52

[All prices US$/bbl Nymex futures contract]

Technical Discussion

Reasons to remain bullish longer-term (still some caution more immediately):
→ bounce off capitulation low in April 2020 has stayed robust to this point
→ Oil price wars between major country producers always remain in play and never more so than now
→ Elliott Wave count remains complex yet potentially still looking for higher longer term

Well, it is clear now that we finally have a 5-wave move completed to the upside off the April 2020 lows. Lows that were achieved at peak doom and gloom for Crude Oil when price action actually pushed into negative territory for the first time in history. Yet all that is now in the past with the energy sector, particularly Oil, having partaken in an impressive recovery off those all-time lows.

In 2022 price finally broke above the $80.00 – $90.00 resistance zone as part of the final 5th Wave to the upside within the initial bullish cycle. And as shown on our chart it is here where we have locked in either a higher degree Wave-(1) or (A). Both labelings are looking for another solid 5-wave sequence north eventually. And as a bare minimum, a Wave-A vs Wave-C equality move could easily see price head up toward $200 USD per barrel over the next couple of years. Price action still has plenty to prove for this to be achieved though.

More immediately the corrective phase presently being witnessed is either a Wave-(2) or (B). Wave-(B)’s are generally more shallow than Wave-(2)’s. So if price action refuses to head lower from here, then the higher probability will be that we have a Wave-(B) trying to complete as more or less a flatter type pattern. In its present form, the consolidation that is taking place above the old resistance zone is very bullish. And it also has confluence to the 200-day MA which is continuing to hold strong as dynamic support. We will keep a close on it, yet in its present form, this price chart is continuing to look very bullish from a bigger picture perspective.

Trading Strategy

We ran a successful trade on Crude Oil on the long side which was recently stopped out for a decent profit. Yet basis our review tonight, another opportunity to get involved again on the long side may be forthcoming very soon. We are going to give it a little more time though and see what transpires over the coming weeks.

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