Crude Oil Elliott Wave Pattern – 09/15/23

The 04/16/23 blog “Crude Oil Elliott Wave Pattern – 04/14/23” illustrated that Crude Oil – Continuous Futures (CL2!) had completed a Primary degree Elliott Impulse wave at 64.58 on   03/20/23.

Subsequently Crude Oil rallied and then made a marginal new low at 63.60 on 05/04/23.

The 05/07/23 blog “Crude Oil Update – 05/05/23”  updated the daily CL2! Elliott wave count and noted.

“The rally from 03/20/23 to 04/12/23 took 16 – trading days.   The decline from 04/13/23 to 05/04/23 was 15 – trading days.  The near equality in price and time of the rally and decline hints that an Elliott wave – Inverse Expanding Flat correction could be developing.  The current rally could end sometime in late May.”

The daily CL2! chart courtesy of Trading View updates the action.

While the rally has lasted longer than late May, it appears that an Inverse Expanding Flat has developed and could be near completion.

The third part of an Inverse Expanding Flat is a five – wave rally that exceeds the termination point of the first part – in this case Intermediate wave (A) at 83.38.

There’s usually a Fibonacci relationship between waves “A” and “C” of an Inverse Expanding Flat.   

Intermediate wave (A) was 18.80 points multiplied by the inverse Fibonacci ratio of 1.618 equals 30.41 added to the Intermediate wave (B) bottom at 63.90 targets 94.31 as a termination point for Intermediate wave (C).  Allowing for leeway the broad zone is 91.50 to 94.80.

Stock indices frequently top with at least one RSI bearish divergence.  Its different in commodities which usually have spike tops. Note the price top made on 03/07/22 with an RSI peak.  This occurred again on the 04/12/23 price top labeled (A).

On 09/15/23 the CL2! – RSI was at 76.89 and in the overbought zone.  This implies an important peak could occur in just a few trading days.

On the bullish side of the coin, Crude Oil and Stocks have similar seasonal patterns.  September is a bearish month for both.   Crude Oil making new rally highs counter to seasonal patterns could mean the rally continues for several weeks.  The same argument could be made for U.S. Stocks.  Perhaps they could rally for several weeks, possibly making new 2023 highs.

The U.S. – FOMC short – term interest rate decision on 09/20/23 could be a trigger event for the direction of Crude Oil and U.S. Stocks.