Oil bulls: Not done yet?

By ForexTime

• Crude oil now pulling back from year-to-date high
• $90 psychological region tested for support now
• Daily close below 21-day EMA may invite more declines
• Elliot Wave theory suggests more eventual room for gains

Oil bulls (those hoping prices will move higher) may just be taking a breather for the moment.

Prices of US crude have pulled back since reaching the year-to-date high at $93.59 on September 19th, but this may be short-lived.

The decline from this swing high was likely due to a couple of factors:

• a bounce off the upward rising channel’s resistance which has been tested three times since the rally starting from June 7th, 2023.
• a technical pullback, after its 14-day relative strength has been in “overbought” territory (above the 70 threshold) for the two weeks prior

Notably, Crude is now testing the psychologically-important $90/bbl level for immediate support.

The 23.6 Fibonacci retracement level also sits close by, at $89.92, to potentially lend stronger support.

Potential support ahead

Crude oil prices are currently still above, albeit declining, towards it’s 21-day EMA.

A continued decline could see bears take advantage of this reversion to its mean to potentially test the following key support levels:

• $88.31: 21-Day EMA
• $87.65:38.2 Fib ratio
• $85.81: bottom upward ascending channel trendline, also the 50 Fib ratio line

The Fibonacci retracement tool is applied to the daily time frame from 24th August’ low at $78.04 to the year- to- dates high.

More upside for Crude? Elliot Wave theory says “yes”

Taking Elliot wave count into consideration, crude oil has yet to complete the 3rd impulse move from wave 2’s termination at the $78.04 lows.

This suggests that Crude prices must reach at least $95.81, or potentially even break above the psychologically-important $100/bbl line, before the 3rd impulse move is deemed “complete.

In short, adhering to the Elliot Wave theory, this suggests there should be more near-term gains ahead for Crude oil.

Article by ForexTime

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