Crude Oil Update: Bearish Triangle Near Completion As Downtrend Looks Ready To Resume

Back in April 28 and again on May 13, we discussed the corrective structure developing on crude oil following the sharp March spike. Since then, the market has continued to respect the broader corrective outlook, and the latest price action may now be signaling that the next bearish leg is close.

As you know, on crude oil we have been tracking corrective price action since the spike to 119 at the beginning of March, from where we have seen nice impulsive trend in wave A, followed by a three-wave recovery into 118.55 resistance. Despite seeing some aggressive drop from that high in the first half of April, the market managed to stabilize around 82, from where we are now seeing a few more swings.

Ideally, it’s part of a bearish triangle which can now be coming to an end since we can count all the needed a-b-c-d-e legs in wave B. Plus, we have seen some nice sell-off so far in the last 24 hours, as authorities said the US was close to reaching an agreement with Iran to reopen the Strait of Hormuz and restore oil flows. It makes us think that energy can be on the way lower, at least temporarily, towards the lower side of a triangle range.

From an Elliott Wave perspective, the structure still looks corrective rather than impulsive to the upside, so we continue to favor bearish continuation once the triangle fully matures. A break beneath recent support could accelerate downside momentum and confirm that wave C lower is already in progress.

We still think that lower gaps at 87 and 67 will eventually get filled.