Are crude Oil Prices Going To Crash? - Wave perspective and Time Cycle analysis

crude oil elliott wave mcx Dec 02, 2021
Crude Oil , Time Cycles , Commodity

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Crude futures ended November with their biggest monthly declines since the outset of the pandemic, as the new variant, along with expectations that coming emergency reserve releases will juice growing supply, has cut the legs out of the market's year-long rally.

MCX Crude oil daily chart as of 02nd December 2021

Crude oil daily chart with 115 Days Time Cycle. (as of 02nd December 2021)

After the news of the new variant and with expectations that coming emergency reserve releases will juice growing supply, has cut the legs out of the market's year-long rally.  (WTI) crude futures ended $3.77, or 5.4%, lower at $66.18 a barrel. The benchmark dropped to a session low of $64.43, also its lowest since August.

Technically, MCX Crude was moving well within the channel.  The zone of 5500-5300 was very crucial in terms of support for WTI Crude prices however in the month of November 2021 it managed to close below the same. In the last week of November 2021, it has been witnessing follow up selling and tested the lows of 5300 levels. The break below the trendline suggests that the next crucial target is placed at $66-$66.50 or 4550 levels. On the upside $69.00 or 5500 is the immediate resistance level. Now let us look at the structure of MCX Crude with Neo wave perspective.

The above chart shows the MCX Crude daily chart with Neo wave perspective. Here we can see that prices broke below the upward moving trendline a few days back and post that it sustained below the same. The recent break below the support zone is a further negative sign from near term perspective.

Elliott Wave perspective: As shown on the daily chart of MCX Crude wave B is going on the upside in which wave (g) has completed near the high of 6418 levels. However, we have not completed wave B as a faster retracement of (g) is not done so we are assumed (x) is going on. The RSI is also near the oversold region so we might witness a small pullback.

Figure 2 shows the Crude Oil daily chart with 115 days’ Time Cycle. We have been adding components of Time cycles into our analysis for more clarity, conviction, and also to find the major lows. Here it has been following 115 days’ Time cycle very well. As per this, prices have recently bottomed out near 57 and 62 areas.

In nutshell, the recent fall is corrective in nature which suggests wave B is under formation which has more legs pending now. It is best to wait for the pullback. The zone 5300-5500 will act as a crucial resistance from hereon. On the downside, it is likely to move lower towards 4550 levels where the previous supports are placed.

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