WTI Crude might have carved a potential top around $43.75 or is on its way to carve one soon. The price action is indicating that there might be a shallow high above $43.50 before the commodity gives in to bears. Look lower from here, going forward.
WTI Crude larger degree wave counts are as follows: The commodity had completed an impulse rally through $147.00 levels in 2008 (chart not seen here). Since then, it has been in a corrective phase and probably into Wave (C) of the correction.
Wave (C) usually unfolds into 5 waves and in this case it initiated from $110.00/112.00 levels. The drop between $110.00 through $0.01 has completed 3 waves until now. If the above proposed wave structure holds, the recent rally between $0.01 through $43.75 is Wave 4 underway.
Normally, Wave 4 would unfold as a triangle and should take time to terminate. Also it will unfold as a-b-c-d-e waves, before dropping lower towards Wave 5 to complete the corrective drop. If the above lower degree wave counts are correct, WTI Crude might have completed its first Wave a, within the triangle.
A drop below $41.45 would confirm an interim top is in place around $43.75 levels and that a 3 wave drop towards Wave b of the triangle is underway. The fibonacci 0.618 of the entire rally is seen towards $27.00/28.00 mark and probability remains high for a push through those levels.
Traders might be prepared to initiate fresh short positions after a break below $41.45 support. The protective stop could be placed above $44.00 mark and projected targets below $28.00 respectively.
Technical Analysis Team
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