Greetings to all, after a sell off yesterday in Oil prices we are back to the drawing board to see which scenario is the most probable one. The bullish one looking for 60-70$ or the bearish one looking for new yearly lows towards 40-42$? Here we will look at the levels we focus on for the next few days.
The decline from 54$ to 47$ is most probably corrective. The upside move to recent highs at 53.75$ is impulsive and yesterday’s decline is most probably wave 2 of a new up trend that started at 47$. Oil price retraced to the 50% Fibo level yesterday. Price could make a new lower low up to the 61.8% Fibo level at 50-49.70$ but overall there are a lot of chances we are making a short-term low. If the bullish scenario plays out, we should expect the upside to be of an impulsive form and eventually break above 53.75$. Breaking above this level will open the way for 57$ which is the first target (100% extension). The important short-term levels to watch are 52.20$ and 50.10$ (61.8% Fibo).
As said above, there are indicators even for the bearish scenario that a short-term bounce should be expected. If however we see a rejection at the lower cloud boundary at 52.20$ then the bearish scenario will have increased chances. It is important for bears to make a lower high and then reverse and break the recent lows in order to start a sequence of lower lows and lower highs.
Concluding…both scenarios imply a bounce is imminent after yesterday’s sell off towards 52$. The way price will behave then will decide which scenario will come true. The form of the rise from current levels will also be very important. An impulsive rise from yesterday’s lows will be a bullish sign. Oscillators are oversold. Decline has corrective form. I’m bullish between 50-51$ for a move at least towards 52$ and why not a full unfolding of the bullish scenario to 60$.