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Hello fellow traders. In this technical blog we’re going to take a quick look at the Elliott Wave charts of OIL Futures ( $CL_F). As our members know, OIL has already reached the extremes from the March 2022 peak at 86.29-63.36 area. The commodity made reaction from there. However shortly after we got break of Sep 26 low, which makes cycle from the June peak incomplete and calling for potential extension within bonus time. Recently OIL made short term recovery that unfolded as Wave Zig Zag Pattern. In the further text we are going to explain the Elliott Wave Pattern and the Forecast.

Before we take a look at the real market example, let’s explain Elliott Wave Zigzag pattern.

Elliott Wave Zigzag is the most popular corrective pattern in Elliott Wave theory . It’s made of 3 swings which have 5-3-5 inner structure. Inner swings are labeled as A,B,C where A =5 waves, B=3 waves and C=5 waves. That means A and C can be either impulsive waves or diagonals. (Leading Diagonal in case of wave A or Ending in case of wave C) . Waves A and C must meet all conditions of being 5 wave structure, such as: having RSI divergency between wave subdivisions, ideal Fibonacci extensions and ideal retracements.

OIL H1 Elliott Wave Analysis 12.23.2022

OIL is doing correction against the 83.38 peak. As the first leg of correction has 5 waves structure, we assume recovery is having form of Elliott Wave Zig Zag. The price showing higher high sequences from 12.09. low, calling for more upside in short term. Besides that ((c)) leg looks incomplete, missing another leg up to have 5 waves. Consequently we expect to get more short term strength toward 81.17-83.0 area ( sellers zone). At that zone we expect sellers to appear for further decline or for a 3 waves pull back at least.

OIL H1 Elliott Wave Analysis 12.29.2022

OIL made another leg up as we expected and reached sellers area at 81.17-83.0. The commodity made decent reaction from the marked zone, which reached and exceeded 50 fibs against the ((b)) connector. As a result any short trades from the marked zone should be risk free+ partial profit taken. While below 81.17 peak we see 2 red completed. Otherwise break of that high would make 83.38 pivot more vulnerable.

Keep in mind market is dynamic and presented view could have changed in the mean time. You can check most recent charts in the membership area of the site. Best instruments to trade are those having incomplete bullish or bearish swings sequences.We put them in Sequence Report and best among them are shown in the Live Trading Room.

US initial jobless claims rose 9k to 225k in the week ending December 24, matched expectations. Four-week moving average of initial claims dropped -250 to 221k.

Continuing claims rose 41k to 1710k in the week ending December 17. Four-week moving average of continuing claims rose 25k to 1680k.

Full release here.

Cable continues to trade within a narrow range for the sixth consecutive day, with psychological 1.20 level offering solid support and keeping the downside protected for now, while the upside attempts repeatedly failed to register a daily close above 200DMA (1.2056).

Holiday-thinned markets and lack of news, keep the pair in a quiet mode, as mixed daily studies add to directionless near-term mode.

The pair is on track for a monthly close in Doji with long upper shadow, following strong rejection at the base of monthly Ichimoku cloud, which generates an initial signal that three-month recovery rally might be stalling.

Expect initial bullish signal on sustained break above 200DMA, which would look for a confirmation on extension above 20DMA (1.2166).

Alternatively, firm break of temporary base at 1.20 and extension through 1.1947 pivot (Fibo 38.2% of 1.1146/1.2442 upleg) would weaken near-term structure and shift focus lower.

Res: 1.2056; 1.2166; 1.2200; 1.2241
Sup: 1.2000; 1.1947; 1.1831; 1.1794

The Euro trades in an extended directionless, narrow-range mode, but underlying bullish structure remains intact, as bulls broke and holding above pivotal Fibo barrier at 1.0578 (38.2% of 1.2266/0.9535) for the third consecutive week that maintains positive tone.

Daily and weekly studies are bullish and support the action, as the pair is also on track for the third consecutive strong monthly rally, although monthly studies are mixed.

Positive bias is expected above 1.0578 Fibo level (reinforced by 20DMA) but the action needs to penetrate into falling weekly cloud (base of the cloud lays at 1.0745) to open way towards targets at 1.0901/1.1000 (50% retracement of 1.2266/0.9535 / psychological).

Conversely, loss of 1.0578 handle, where a daily higher base is also forming, would weaken near-term structure and keep the downside vulnerable of deeper pullback.

Rising 30DMA (1.0512) offers next support, guarding more significant point at 1.0325 (200DMA).

Res: 1.0674; 1.0745; 1.0786; 1.0901.
Sup: 1.0578; 1.0512; 1.0473; 1.0443.

AUDUSD set another foothold around the two-month-old ascending trendline last week, correcting higher to test the 0.6800 level on Wednesday.

Despite the pickup, the 38.2% Fibonacci of the 0.7660–0.6169 downtrend and the 20-day simple moving average (SMA), which is also the middle Bollinger band, restrained the bulls around 0.6740 for the eighth consecutive trading day.

The momentum indicators are not giving directional signals, with the RSI hovering around its 50 neutral mark and the MACD flattening clearly below its red signal line. That said, as long as the price keeps trading within the lower Bollinger band area, downside movements are more likely than upside ones.

In case the support trendline cracks around 0.6700, the price could depreciate towards the 50-day SMA at 0.6625. Falling lower, selling pressures could intensify towards the neckline of the inverse head and shoulder pattern at 0.6520, where the 23.6% Fibonacci is placed too. Slightly lower, traders will also keep a close eye on the key constraining line coming from August 2021 at 0.6460.

In the positive scenario, where the pair breaks the wall at 0.6740, buyers will not get excited unless the recovery stretches above the 200-day SMA at 0.6860 and then beyond the tough descending trendline from May 2021 at 0.6915. Note that the 50% Fibonacci is in the neighborhood. Hence, a successful penetration higher could trigger a new bullish wave up to the 0.7136 – 0.7185 restrictive region, especially if the 0.7000 number gives way as well.

All in all, AUDUSD maintains a neutral status within the 0.6700 – 0.6740 zone. While a bullish breakout may attract fresh gains, a stronger rally above 0.7000 would be needed to upgrade the short-term outlook.

WTI oil futures (February delivery) have been stuck in a downtrend since June but managed to bounce at the one-year low of 70.30 and recoup some losses. However, this recovery proved to be short-lived after the 50-day simple moving average (SMA) curbed the commodity’s upside.

The momentum indicators currently suggest that bearish forces have gained the upper hand. Specifically, the RSI has fallen below its 50-neutral mark, while the stochastic oscillator is sloping downwards after exiting the 80-overbought territory.

An extension of the recent pullback could shift the focus to the September low of 76.25. Sliding beneath that floor, the price could descend to test the 73.40 barrier. A break below that zone could open the door for the one-year low of 70.30.

Alternatively, if buyers re-emerge and seize control, oil futures could move higher to challenge the recent rejection point of 81.17, which overlaps with the 50-day SMA. Conquering this barricade, the bulls might then aim at 83.30 before the November high of 92.50 comes under examination. Surpassing the latter, the price could encounter strong resistance at the August peak of 97.65.

In brief, the short-term technical picture has deteriorated again for WTI oil futures since their latest advance came to a halt. For that bearish sentiment to alter, the price needs to profoundly jump above the 50-day SMA.

Three weeks ago, we talked about the GBPUSD pair, according to which a global corrective trend is forming – a triple zigzag w-x-y-x-z, as part of which the market builds the final actionary wave z of the cycle degree.

The wave z most likely takes the form of a primary triple zigzag Ⓦ-Ⓧ-Ⓨ-Ⓧ-Ⓩ. It is possible that a bearish trend is currently developing in the primary wave Ⓩ, which may take the form of an intermediate double zigzag pattern (W)-(X)-(Y). The formation of the intervening wave (X) has recently ended. The last sub-wave (Y) is likely to take the form of a double zigzag W-X-Y.

The end of the first actionary wave W is expected at a minimum of 1.095.

Alternatively, it is assumed that the cycle wave z could be fully completed in the form of a primary triple zigzag.

Thus, we see that since the end of September, bulls have started to move the price up in a new trend.

Perhaps we are seeing the formation of a primary triple zigzag Ⓦ-Ⓧ-Ⓨ-Ⓧ-Ⓩ, where the first four parts are already formed.

In the last section of the chart, the final actionary wave Ⓩ is formed. Most likely, it will be at 76.4% of wave Ⓨ, and will end near the level of 1.283.

The WTI oil remains at the back foot for the third consecutive day and extends weakness in early European trading on Thursday.

The latest reports showed fresh surge in Covid cases in China, just days after the government eased its strict policies that darkened the outlook and optimism about faster demand recovery.

The two-legged recovery from Dec 9 $70.09 low (the lowest in one year) failed to sustain break through pivotal barriers at $80.00/$80.20 (psychological / Fibo 76.4% of $83.32/$70.09 bear-leg), leaving a bull-trap pattern and generating an initial signal of reversal.

Subsequent acceleration lower completed Doji evening star reversal pattern on daily chart, which added to negative signals.

Technical studies on daily chart contribute to weakening near-term structure as bullish momentum is fading and stochastic is heading south after forming a bearish divergence and emerging from overbought territory.

Fresh bears face pivotal supports at: $77.25 (daily Tenkan-sen); $76.93 (Fibo 38.2% of $70.09/$81.15) and $76.70 (daily Kijun-sen) where headwinds could be anticipated, but firm break would open way for deeper fall.

On the other hand, failure to break these supports would point to a healthy correction of recovery from $70.09 and keep larger bulls in play for renewed attack at $80.00/$80.20 pivots.

Res: 78.54; 78.79; 80.00; 81.15
Sup: 77.25; 76.93; 76.70; 75.62

WTI crude steadies as Russia bans countries that abide by the Western price cap. On the daily chart, the commodity would remain in a downtrend unless it manages to break free of 82.00. A bearish RSI divergence suggests slowing momentum as the price tests this major supply area. The resistance-turned-support at 77.00 is the level to assess the strength of follow-through. Its break would make the price vulnerable to a new round of sell-off, possibly towards the recent low and psychological level of 70.00.

Bullion remains sideways as the US dollar attempts to claw back losses near year’s end. On the daily chart, the price has been inching up along the 20-day moving average. A rising trend line from early November also offers support to the price action on the hourly time frame. A pop above the recent double top (1823) indicates a strong bullish pressure, but a bounce off the congestion area (1795) formed by the trend line and the base of the bullish breakout is key in keeping the rally going, with 1850 as the next target.