After breaking below the 50 & 200DMA, there are two areas of local Support remaining for WTI Crude Oil. First one being the major trend formed by connecting the dips in mid-April 2020 and December 2021 and extending outwards. This trend also intersects the 61.8% Fib support nicely at around $88, which we are now approaching. The Fib retracement was taken from the start of the last local impulse at the Dec 2021 dip (around $62) to the last local high of $129.5, which occurred in early March of this year. I believe we are completing a 3 wave Flat pattern correction, which started from said local high. I am expecting to see a bounce for upside when the chart approaches this intersection (aka critical juncture) of the two supports, despite my expectations of upside in DXY. This would indicate Supply/Demand dynamics of Crude Oil would overrule a strengthening Dollar relative to other currencies. This also seems to be supported with RSI approaching Oversold region.
If she decides to break below these supports, I am expecting to see a smaller time frame correction for downside (as shown by the dashed arrows). However, I am biased against this downside as I'm not seeing the long term Bear case for Crude Oil in context of the rising Demand vs diminishing Supply and Production of Oil in current markets. Only thing that would make me go Bear is if the Dollar strengthens faster than the demand for Oil, or somehow more Supply enters the market, or Oil price reaches the point of Demand Destruction. I don't think we are there yet based on evidence of increased demand for travel and with many countries building new roads and airports. Doesn't seem like we have reached the price of pain for the majority of people yet, and undeveloped markets that get priced out will revert back to coal, wood, and animal fat for energy, but only time will tell.
If she decides to break below these supports, I am expecting to see a smaller time frame correction for downside (as shown by the dashed arrows). However, I am biased against this downside as I'm not seeing the long term Bear case for Crude Oil in context of the rising Demand vs diminishing Supply and Production of Oil in current markets. Only thing that would make me go Bear is if the Dollar strengthens faster than the demand for Oil, or somehow more Supply enters the market, or Oil price reaches the point of Demand Destruction. I don't think we are there yet based on evidence of increased demand for travel and with many countries building new roads and airports. Doesn't seem like we have reached the price of pain for the majority of people yet, and undeveloped markets that get priced out will revert back to coal, wood, and animal fat for energy, but only time will tell.