To trade the market one needs to follow the objective technical tools so that next trend can be capitalized with proper risk management. Till last week bias for Crude was positive as it touched the high near 3780 with strong momentum however at the same time prices touched the important channel resistance and thus the sharp reversal was seen in last 2 days. We maintained our cautious stand on Crude in the morning of 9th January 2017 on back of Elliott wave pattern under formation which helped subscribers to trade in the right direction. Below is the part of research taken from “The Commodity Waves Short Term Update”.

MCX Crude daily chart:

MCX Crude,Elliott wave

The above chart clearly indicates that reversal was not a surprise and prices have been following the channels very well from the mid of 2016. On the other side RSI has failed to move above 70 level in entire 2016 and recently also RSI has done the same thing.

MCX Crude Jan 60 mins chart: (Anticipated Elliott wave pattern)

MCX Crude,Elliott wave

MCX Crude Jan 60 mins chart: (Prices behaved as per Elliott wave pattern)

MCX Crude,Elliott wave

(Part of research published in the morning of 9th January 2017)

Wave analysis:

In the last week high volatility was witnessed in Crude in which prices first touched the high of 3780 level and post that reversed on downside towards 3550 level. This has changed the structure of last few months and indicates us to be cautious now.

As shown in 60 mins chart, prices have completed triple standard correction pattern at the high of 3780 and post that sharp reversal has retraced the last leg of up move in faster time. This suggests time as well as price reversal. Hence medium term trend has reversed on downside. As of now minor wave (b) is ongoing which is retracing the prior down move. Hence one should trade with strict risk management on long side. Immediate support is placed at 3635 level and as long as this level is intact sideways to positive action can continue.

In short, Crude is moving higher in form of wave (b) and trade with strict stop loss on long side. 3635 is the crucial support. Any move below 3635 will be the sign of negativity.

Above research clearly shows that we were not much optimistic on the up move of Crude and cautioned our clients that reversal on downside is possible as prices were moving up in wave (b) of pattern. Prices reversed on downside from the blue channel which acted as resistance as per polarity reversal. Crude has reversed from the important juncture and we think that still more pain is left!

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