Technicals | Feb 23 2022
Bottom Line 22/02/22
Daily Trend: Neutral
Weekly Trend: Up
Monthly Trend: Up
Support Levels: $76.15 / $62.29 / $55.08 (April 2022 Contract)
Resistance Levels: $100.00 / $141.50
[All prices WTI futures US$/bbl]
Technical Discussion
Reasons to remain bullish longer-term:
→ oversupply a major issue in the past yet this has rebalanced in a post-Covid-19 environment
→ bounce off capitulation low in April 2020 has stayed robust to this point
→ Oil price wars between major country producers always remain in play
→ Elliott Wave count remains on track for higher levels looking ahead
Crude Oil’s highest open interest (O.I) is now with the April 2022 contract. The trend remains up as we continue to label our price chart as moving higher within a higher degree Wave-(3). And as this wave is of a higher degree we are expecting it to subdivide into an intermediate 5-wave pattern within itself combined with some further minor subdivisions along the way. Simply put, this is what bullish markets do.
So zooming in on the immediate move, our view is that an intermediate Wave-1 of (3) is now nearing completion although we do see the potential for yet another higher swing low pattern to trigger from here. Which will put the $100.00 price point on the radar. Yet as we mentioned in our video tonight, if price does tag $100.00 over the coming weeks, it is a strong line of historical resistance combined with it being a line of psychological resistance as most significant round numbers are.
Another notable point is that some strong-looking Type-A bearish divergence is now in play. With any swing higher from here potentially solidifying this indicator and creating some upcoming weakness. So combined with overhead resistance, price may now be getting close to locking in a Wave-1, with a corrective Wave-2 south to follow. Bigger picture though the uptrend is exceptionally strong here, so the longer-term bullish outlook continues to remain firmly in place for now.
Trading Strategy
We have a couple of U.S energy stocks active in our trading area at the moment which have been reaping the rewards of a bullish energy sector. In relation to the Crude Oil contract though, based on our review tonight, I would prefer to sit tight for now and see if we can be granted the anticipated breather over the coming days. Then look to see if we can latch onto a low-risk opportunity on the long side post the anticipated bout of weakness. Especially as from a bigger picture perspective, a larger equality move looking well ahead targets up towards $140.00.
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