Please the last 2 charts I posted covering the bearish cycle that began from May 2011 for back ground details and other comments - links are below. In the last chart I suggested a possibility that the oil might bottom around 25 - 27 area for this cycle to complete, despite the fact that there is still widespread bearish sentiments fundamentals based on over supply looming economic downturn. Nevertheless, from price charts it appears that we might have the low in place now and should be looking for either a complete reversal or significant retracement bounce towards 60 -70 zone in due course.
Here is the summary of technicals observation from the chart: 1. We have declined approx, 77% from May 2011 which are similar drop from 1990 -98 and 2008 -09 . 2. we are at previous support zone visiting for the 1st time in both UK Brent and US (WTI) accompanied with dropping volume to suggest selling pressure easing. 3. UK Brent formed a classic Ending Diagonal (falling wedge) from May 2011 of 3-3-3-3-3 construction now complete 4. Similarly fr the US (WTI) we have corresponding zigzag with final wave taking a shape of Ending diagonal wave 5 also now complete) 4. 5. Potential confirmation of reversal appear to be evident in price taking out the previous pivot high in process of now forming series of higher highs and lower lows. 6. As this moment the upside could be 60 - 70 zones based on Elliottwave guide lines that retracement could target wave 4 of one lower cycle degree and that it also coincides with possible structural previous support which now could be resistance.
Conclusion: On the watch out for bullish trades setup upon decent retracement.
Potential candidates would be long the Oil or shorting the companies whose fuel bill forms a significant part of operating cost such as airlines and freight transport.
Warning: This is my interpretation of price action using TA approach that I consider helps me the most but could be completely wrong. Therefore as always, please do your own analysis for your trade and risk management. You should follow this on Paper Trading Account till you feel confident to apply the skill to a live account.
UPDATE - 7th May 2016: Dollar Index (DXY) appear to have formed an intermediate bottom from which we could anticipate a retracement bounce (probably in progress already. If correct then this should result in some sort of retracement in most USD denominated assets like Gold, Silver and Oil.
Corresponding Oil daily chart. It appears that we have a zigzag move of the Feb low with wave c forming potential rising wedge (Ending Diagonal). If correct we could see a pull back towards $36 region where we could start to look for potential long entry. So for now time to be patient waiting from the side line.
DanV
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Update 27th April 2016: We might have rising wedge that could complete in the $45 area which would complete an abc zigzag move of the low and retracement is anticipated for considering long trade in due course.
DanV
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This would fit in nicely as it coincides with Dollar Index correcting to the upside after 5 wave decline in the form of falling wedge
DanV
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UPDATE 4th April 2016:
Like Gold & Silver, Oil has completed its initial move of the low and is not in progress of a zigzag correction. Which if it equates to Fib 50% of 61.8% then we could see 34 - 32 zone as possible level of the low to form. May be sometime during back end of April to early May.
DanV
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Weekly Chart -
Monthly - Correlation charts of US Oil & UK Brent with other technical notes
Corresponding Oil daily chart. It appears that we have a zigzag move of the Feb low with wave c forming potential rising wedge (Ending Diagonal). If correct we could see a pull back towards $36 region where we could start to look for potential long entry. So for now time to be patient waiting from the side line.