Crude Oil: Poised For Upside

Technicals | Nov 30 2022

Bottom Line

29/11:
Daily Trend: Down
Weekly Trend: Down
Monthly Trend: Down
Support Levels: $90.00 – $80.00 (?) / $70.92 (Jan 2023 Contract)
Resistance Levels: $100.18 / $118.77

[All prices US$/bbl Nymex WTI futures]

Technical Discussion

Reasons to remain bullish longer-term (corrective phase still in play more immediately):
→ bounce off capitulation low in April 2020 has stayed robust to this point
→ Green energy vs Fossil fuel battles globally becoming heavily politicized
→ Elliott Wave count remains complex yet potentially still looking for higher longer term

It’s been a month since we last reviewed the big Crude Oil contract with the highest Open Interest (O.I) now with the January 2023 contract. It has remained in corrective mode since the March 2022 highs were locked into place, yet as we mentioned in our video tonight, things are starting to get quite interesting.

And by interesting, we mean that almost perfect ‘time symmetry’ is now in play, and when this occurs it is time to sit up and take notice as it may mean that buyers are getting ready to take an interest again.

The bullish impulsive move off the April 2020 lows took almost 2 years to complete, with the March 2022 highs locking in either a higher degree Wave-(1) or (A) high. Very generally speaking for patterns to remain bullish, especially larger patterns like we are observing here, corrective phases take about a third of the time of the previous move north to complete.

So this is exactly where we are now, and last night we witnessed some buyer interest coming in with price intraday tagging a lower low circa $73.60, yet closing towards its highs circa $77.24. Plus we had a rise in volume. So some positive price/volume attributes arrived last night, yet it is still only very early days.

Whether this corrective phase is a Wave-(2) or (B) doesn’t really matter either as both remain bullish looking well ahead (see video). Yet with typical Wave-(2) depth generally being more towards the 50.0% retracement zone aligned to $54.85, and with price action continuing to trade shallow just above the 38.2% pullback zone circa $69.85, we are leaning toward this move being a Wave-(B), as they are generally more shallow than Wave-(2)’s. Price is oversold on both the dailies and the weeklies now as well so not a bad place for buyers to start taking an interest again. It’s back on our watchlist.

Trading Strategy

Crude Oil is finally starting to grab our attention again from a trading perspective.

For mine, the trade trigger on the long side will be above $93.77 which will take price above the 7th November rejection bar, back out of the support zone, combined with breaking back above the 200-day MA which is presently acting as dynamic resistance.

Pre-breakout we would ideally like to see price acting impulsively as well. I’m not asking for much! No recommendation just yet although we could be getting close which means keeping a keen eye on your favorite ASX Oilers as well!

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