Crude Oil rallied in the last 2 weeks and gained more than $3 to stay above $50. This was in line with our last forecast. How far will the rally go?. Is there a crash coming at the end?. Based on our Crude Oil Elliott wave Forecast, we look at the possibility of price staying above $50 in the coming weeks.
05 April, AtoZForex - In the last update on Crude Oil, we projected a strong rally toward $58-$60 when price was at $48. This projection was based on a long term leading diagonal pattern. Price has been confined with this pattern since the rally broke out early 2016. A leading diagonal is a leading pattern which is usually followed by a fast and deep corrective move before trend continuation. This means that a crash could happen if price completes this pattern in the coming weeks. Crash to what price? Around $40 before the rally gets even stronger toward $70. The chart below was used in the last update.
Crude Oil Elliott wave analysis, H4 (click to zoom)
A rally is very likely to spring from the current level toward $58 in the coming weeks. At $58-$60, another wild fall could happen if the diagonal completes. Diagonal patterns are famous for wild high momentum moves.
Crude Oil Elliott wave Forecast staying above $50?
Price rallied above the psychology $50 and stays above for days. For the diagonal to complete, it is important that price rallies further. The chart below shows the latest wave count of Crude Oil.
Crude Oil Elliott wave analysis, H4 (click to zoom)
The rally is expected to continue to the target level at $58 though there may be a corrective dip (wave b) in the process. If the diagonal pattern completes at the marked level, there may be a crash to around $40. We have seen how powerful diagonal patterns are. They are often followed by a fast corrective dip (for a leading diagonal) and a complete reversal (for an ending diagonal). It will be interesting to know how this play out.
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