Crude oil moved sharply down during the coronavirus lockdown back in March, but energy quickly turned bullish again with economic stimulus packages coming into play across the globe.
Looking at crude oil from an Elliott wave perspective, we can see that energy rallied in five waves and completed a five-wave recovery from the April lows. The subsequent reversal lower in three waves is part of a corrective move in wave 2)/B).
Currently, we are tracking subwave C lower, which can reach 34.6/30.7 area, where former swing lows, and Fibonacci Ratio of 38.2 can react as support. If we get a much deeper correction, then next support can be at 26.5/23.6 zone, where the Fibonacci Ratio of 50.0 and 61.8 sit.
This deep retracement would be possible if second global coronavirus lockdown would repeat, but event then we think that sooner or later energy will find a support as oil companies are now prepared much better than before, and doubt they would pump as much as they did back in March.
For more info check out my Crude Oil Elliott wave video below:
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The authors may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
