I have opted for a keep-it-simple approach for oil (WTI) today.
As you can see on the daily timeframe, we have been working with a defined downtrend in oil since price chalked up a top at $121.31/bbl in June 2022. Interestingly, the downtrend offered several sell-on-rally scenarios should one have faded the lower side of the upper Bollinger Band (set to 2 standard deviations using the default 20-period simple moving average).
AB=CD Pattern Unfolding on the Daily Chart?
Early last week witnessed price movement probe lows of $64.35, a move that came within striking distance of clipping the $62.31 2 December low (2021) and also invaded territory outside the lower Bollinger Band. Since then, we have observed a moderate recovery unfold, moulding what many Harmonic traders will recognise as a potential AB=CD bearish formation (price is currently forming the D-leg).
Overhead Technical Confluence in View
Joining the 100% projection at $74.33 (which marks the AB=CD resistance), chart studies have thrown the following technical structure in the mix: an ascending support-turned-resistance taken from the low $70.24, a 61.8% Fibonacci retracement at $74.66, two horizontal resistance levels at $75.31 and $72.73 as well as the 20- period simple moving average (marks the inner band of the Bollinger Band’s construction).
Consequently, the combination of technical tools between $75.31 and $72.73 could be an area sellers target in this market to perhaps try for fresh lows, in line with the current downtrend.
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