Is Crude Setting Up For Something Big?

The oil market has been in a bullish mode for some time now and technical should never be ignored when it comes to commodities. However, a majority of this bull run has been due to increasing global tensions because of Ukraine and Iraq. Both these are crucial regions for exports of energy products. Apart from this, the weakening US Dollar also helped push up prices in the oil market.

International WTI Crude:

Daily chart-



The daily chart of WTI crude oil above shows that price has given a breakout after consolidating in the Ascending Upside Triangle pattern. Currently, Elliott wave theory suggests that price is trading in wave 2 of the 5 wave structure of wave 3/C.  Estimates based on this suggest that oil price may touch $113 level within 6-8 weeks.




Weekly Chart:-


The long-term chart for weekly chart of WTI crude oil above shows that price is in the A-B-C corrective structurewhere Wave B is a complex corrective with triangle formation. The price could have completed its B wave by the end-2013. Since start of 2014, the price is on an uptrend. It gained more than $15 in a six-month timeframe. The labeling shows that the price has started its C wave structure. If the price is able to cross this triangle,we may expect it to go up at leastto where wave A is. This could lead to a target of $150 unfolding over the longer term.

MCX Crude Oil Chart:

Daily Chart:



In the daily chart forcrude oil above, we can see that price has gained more than 3% in June. After providing a breakout from Descending Triangle formation at the 6120 level, the price shot up sharply. Labeling Elliott wave count suggests that the price is trading at wave ii of 5 wave structure of wave 3/C. We expect the price to correct to the 6200 level within 1-2 week. As per the price extension wave 3/C,the target comes to 6945.

Weekly Chart:


The long-term or weekly chart above suggests that price is on an uptrend. Applying the Elliott theory, we can see that the price is in wave b of the higher degree corrective wave of wave 4 of higher degree Wave C chart suggests that price may complete its wave b close to the 6950-7000 level by the end of this year. It would be foolish to predict the longer-term target right now. However, the chart and the set of counts suggest that after completing correction of wave 4 at 5500,the price may resume its uptrend for the final wave, i.e. wave 5 of wave C, which gives us a target level of 8500.




Short term (6-8 weeks)

Long term (30-36 months)

WTI Crudeoil



MCX Crudeoil




Written By:

Vaibhav Chudasama CMT
Commodity Analyst- Retail Research

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

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