Here we follow up on our late October post about crude oil futures. Price followed our preferred bullish path, and we now have more information with which to forecast future moves. We believe another downward swing should begin around now, although we recognize that .
In our October post, we indicated that we thought price should fall from where the blue arrow is shown on the chart below. We also suggested that a break beneath the gray channel line (at a price of approximately $80) would serve as better confirmation of the downward move. Note that the gray line was later tested again from below, which represented another good short entry.
Now we believe there is enough structure on the chart to clarify how far the downward sequence has progressed. The move down from the 2023 high appeared impulsive, so we are counting it as wave 'i' of (c) of [ii]. The rise out of wave 'i' appears corrective as a wave 'ii' should, and it is now testing resistance zone at 80.70.
Even with our bearish view, we can't rule out a test of higher resistance near 82.50 – 82.80. Any indicator-based signals for a downward turn will be more apparent on charts that are faster than the weekly chart shown here.
Better confirmation of the downward turn would come with a daily and weekly close beneath 76.20, at which point the trend following crowd might get onboard with the trade.
Some technical factors favoring a downward turn from nearby include the 24-week cycle being near its crest and the adaptive CCI momentum indicator showing a test of it's zero line from below.
If price turns downward in sub-wave 'iii', the first area to watch for possible support would be near 64.60. However we believe price can push considerably lower than that, and the area near 54.60 looks like a better support target for 'iii'. After that, we would expect a fourth-wave consolidation to appear before price again tries to push downward to complete the impulsive wave (c) of [ii].
Lower targets near 49.80, 47.50 and 46.90 look viable before price finds durable support for a new upward phase.
Update from the intraday trading room
Phi pointed out a really nice bullish setup last Wednesday with ES attempting to find afternoon support near 5098. With price action having been rangebound and the upward pattern seemingly incomplete, there was an opportunity for ES to climb higher overnight and during the next day.
The plan worked well, with ES rising considerably overnight and moving into the next set of resistance levels by Thursday morning. The support that Phi identified on Wednesday afternoon ended up being the platform that ES used as the base for climbing all the way to 5258 by Friday.
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