Crude Oil: Lowest price in 58 months
|Executive summary
- Crude oil has been declining since in a final terminal wave.
- Crude oil appears to be nearing the end of its 2-year ending diagonal pattern.
- Downside targets are between $49.00 – 54.20.
Crude oil continues to drift lower as market participants anticipate a weaker economy and carry trade unwind with Japanese interest rates on the rise. The downside trend in Crude oil is mature and nearing completion.
Current Elliott Wave analysis
We are tracking a large 2-year ending diagonal pattern in Crude oil that began in September 2023. The ending diagonal is one of the five basic Elliott wave patterns and is shaped like a falling wedge.
We previously forecasted this pattern in the Q4 Commodities forecast as well as a follow up on it with maturing Elliott wave pattern.
As Crude oil digs deeper into our target zone, it appears the price is in the final wave of the decline at four degrees of trend.
Those degrees of trend include:
- Wave (C) of a bearish zigzag that began March 2022
- Wave 5 of the ending diagonal that began June 2025
- Wave ((y)) of 5 that began September 2025
- Wave (c) of ((y))
I suspect today’s new low is wave i of the smaller ending diagonal (c) of ((y)) of 5 of (C) .
This implies a couple more jabs lower to finalize this pattern.
I’m refining the downside bottom to possibly reach $49.00 – $54.20 (yellow box). Include within this price zone are a couple of Fibonacci extension levels.
The next bullish trend is anticipated to be a booming rally that could last multiple years to a decade, consider it a commodity boom. It may be driven by high inflation or constrained supply as the world becomes addicted to energy.
Bottom line
Crude oil appears to be nearing the end of a large ending diagonal pattern that began September 2023. We estimate a downside target, using Elliott wave principles, to be $49.00 – 54.20.
If Crude oil rallies above $63, then we’ll begin to consider a MAJOR bottom may be in place.
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