WTI Crude: Near Term To Long View
Bishnu Prasad Basyal | Sep 28, 2017 01:04PM ET
Nymex Crude has topped at 147.27 on July 2008. Since then, it is on the bear trend. After topping at 147.27 on July 2008, it fell to the level of 32.40 till December 2008 in just 5 months. The first drop was the biggest drop in a very short time frame we have ever witnessed. From Elliott Wave prospective, The top of 2008 can be considered as Super cycle degree wave (V) top and fall since then can be considered as cycle degree bear trend. The bear trend in Crude consumed almost 9 years and still 63% down from the peak. Although, it has recovered from the low of 26.05 made on February 2016 i.e. 100% recovery from 2016 low, but it is too early to conclude that it has bottomed.
You can find below analysis on Nymex (WTI Crude) based on Elliott Wave pattern in different degree and time frame;
Near Term (1-3 weeks)- Topping up: In the near term, the rally which started on 30 August 2017 from the level of 45.58 seems to be concluding. Resistance region above are 53-54 for this rally and support is around 51.80. A fall below 51.80 will suggest that near term up trend in crude has ended and corrective fall towards 50-49 is possible before rallying towards 55 in the very short run.
Short Term (3-6 months)- Moving up: The short term trend in Crude remains up for the next 3-5 months. After correcting towards 50-49, it may continue to rally towards 60-65 over a period of 3-5 months.
Medium Term (7-24 months)- First topping up and then trending down: The rally which started since February 2016 still has potential to move up towards 60-65 in Double Ziz- Zag manner comprising wave (W)-(X)-(Y), if it remains above 45.58. The next immediate resistance is placed around 55. Rising above 55 may push prices towards 60-65 over a period of 3-5 months. Post completion of this corrective rally over next 3-5 months, next move should be on the down side which may eventually break the low of 26 over next 12-24 months.
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Long Term (2-5 years)- Completing down cycle: The bear cycle which started since July 2007 seems to be completing near 20-15 over a period of next 12-24 months. Post completion of this bear trend, crude may start next upwards journey once again. According to Elliott Wave guideline, after completion of one upward cycle, a corrective move against the trend may retrace up to previous wave 4. As per the current Elliott Wave structure of crude i have assumed, the previous wave 4 resides at 10. Thus, it won't be exaggerated that Crude may bottom near $10 a barrel in its cycle wave bottom.
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