Crude turns lower as rally falters below key resistance

Gregor Horvat Wavetraders

Crude oil has made a clean reversal to the downside after a wave B rally that stalled at the upper boundary of the corrective channel and failed to break above 119, which confirmed that the higher degree correction was still in play. This view remains unchanged, as price moved lower after breaking the channel support near 97 this month. On a smaller scale, we can now count five waves down from around 118, which could be a leading diagonal, suggesting that after a three-wave rebound the market may continue lower. In that case, higher resistance should be respected as price is now still in wave (a) of a three wave bounce, but technically oil can see limited gains soon near current 100-106 area.

We still think that oil is about to touch $77 and possibly even will drop closer to 66 gap.

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Author

Gregor Horvat

Wavetraders

Experience Grega is based in Slovenia and has been in the Forex market since 2003.

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