AB=CD for Oil?
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.
Author
Aaron Hill
FP Markets
After completing his Bachelor’s degree in English and Creative Writing in the UK, and subsequently spending a handful of years teaching English as a foreign language teacher around Asia, Aaron was introduced to financial trading,
