Home Daily Analysis Charts / Trade Ideas Is Oil Group Losing Momentum? – Part 1

Is Oil Group Losing Momentum? – Part 1

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The Oil Group has been moving sideways during the last trading sessions, but the question is: is it losing momentum? In this three-part articles series, we’ll analyse the current situation and what to expect of Crude Oil, Brent Oil, and Gasoline RBOB.

Crude Oil – The Second Equal Leg Completed

Crude Oil is moving upward in a bullish cycle started in December 2018 when the price found support at $42.40. The upward sequence drove the price to complete a second bullish leg at $64.59. It is likely that it aims to reverse the market, but before deciding to pull the trigger, we have to understand where is the price in this latest structure.

The 4-hours chart

The 4-hours chart is a marvel; we can observe two motive movements in an upper Elliott Wave degree (blue arrows). Also, we can observe two corrective waves (red arrows) even the alternation rule “if the first corrective wave is simple, the second corrective wave will be complex.” Additionally, in each motive wave, we can observe its internal waves. In conclusion, the second leg has a pending fifth bullish movement.

What next?

At the moment we have identified the fourth wave, and the ascending channel providing us with clues for the fifth wave. Now it is time to analyse the fifth of the fifth wave in Crude Oil. The fifth of the fifth wave corresponds to an impulsive movement starting from the bearish failure in the fourth wave to the new higher high expected.

In the 1-hour chart, we observe a set of arguments to foresee that the bullish cycle of crude oil should end on the range between 67.61 to 68.18:

  1. The second leg wave is incomplete; it has pending the fifth wave.
  2. The fourth wave should fail early the corrective movement.
  3. Probably, the fifth wave ends with a spike in the ascending channel.
  4. There exists a confluence area between Fibonacci levels among the upper wave degree and the lower wave degree.

Remember that the price is not bound to move as we say in our forecast. Charts released corresponds to an Elliott Wave Theory application.

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