WTI Crude might have carved a meaningful top around $41.60 levels on June 23, 2020. It has dropped to $37.00 levels since then and could be preparing to resume lower again. Bears are expected to remain in control for now, provided WTI Crude stays below the $41.60 intermediary resistance.
WTI Crude had earlier dropped to historic lows towards $0.0l levels in April 2020, not shown here. Since then, the commodity has been in control of bulls and managed to carve a series of higher highs and higher lows. The recent high was marked at $41.60 levels with RSI showing bearish divergence.
A price high along with bearish divergence on the RSI is a potential bearish formation, indicating a top. As expected, WTI Crude has dropped from $41.60 highs and is expected to continue lower towards $24.00 and $15.00 levels respectively.
Coming back to the short term wave structure, the drop from $41.60 through $37.00 could be marked as corrective Wave A. Please the subsequent rally is also clearly in 3 waves, labelled as a-b-c, and has managed to reach the fibonacci 0.618 retracement of Wave A around $40.00 yesterday.
Ideally, WTI Crude should continue dropping lower from here towards $24.00 and subsequently towards $15.00 levels as Wave C unfolds/progresses. For the above bearish structure to remain intact, WTI Crude should stay below the $41.60 interim resistance.
Also note that fibonacci extensions of Wave A highlighted here are indicating short term targets as $35.30 and $34.25 respectively. These would eventually match up with fibonacci retracements of the earlier rally between $0.01 and $41.60 respectively.
Most traders might be preparing to initiate fresh short positions around $39.00/40.00 levels, with protective stops above $41.60 and projected targets below $26.00 and $15.00 respectively.
Technical Analysis Team
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