Crude Oil on Slippery Slope: Reveals Technical Analysis

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Many traders are bullish on crude oil due to fundamental changes after the recent conflict in the Middle East. However, technical analysis of the crude oil price chart suggests bears are born in crude oil. There are 4 strong signs of downtrend in crude oil;

1. Trend Analysis Reflects Up-trend is Abolished:

Not only up-trend line is broken but it has also been retested. Currently, no uptrend prevails and the downtrend has started in crude oil.

Crude Oil trend analysis reveals uptrend line is broken and retested.
Crude Oil trend breakdown

2. Elliot wave Analysis Suggests no Uptrend Prevails:

Elliot wave analysis of the crude oil price chart reveals all 5 waves of uptrend have been completed as shown in the figure below.

Elliot wave analysis of Crude Oil price chart reveals all the 5 upside waves are completed.
Elliot wave analysis of Crude Oil trend

Someone may confuse the current downward move as 4th Elliot wave but it is not correct. According to the principles of Elliot wave theory, the 4th wave can never approach to 1st wave. So the current downward move is not 4th wave, but 1st downward wave of the new downtrend.

3. Volume Analysis: The majority is with Downtrend

They say volume leads the price. Analyzing the trading volume profile reveals that volume is greater on downward market movement rather than on upside move. It means a greater number of market participants believe in a lower trend rather than up trend.

WTI trading volume analysis suggests higher volume is observed on selling side.
WTI trading volume analysis

4. Candlestick Patterns Analysis; Bearish Pattern Forms

Evening star candlestick pattern is formed on a weekly time frame. It is a bearish reversal pattern and its formation on the weekly chart signals a bearish trend for several weeks.

Evening star pattern is formed in WTI weekly chart
Evening star pattern in WTI 1w chart

End Note:

Above technical analysis serves as a guide for the determination of crude oil price trend. It involved studying price trend, Elliot wave analysis, trading volume analysis, and chart pattern analysis. This technical study reveals that crude oil is on a clear downtrend. However, one must be careful while taking a trading position as the time may be near for an upward correction of the current downside move.

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