The focus of today’s analysis is the American light crude oil or WTI.
After the drastic drop from 1st June 2014, when the WTI was priced at $107.640 per barrel to 1st February 2016, when it was $26.035 per barrel, its price finally started to slowly recover.
If we look at the monthly time frame we will see that the move to the upside began in a typical way – with a pin bar and with a correction that lasted almost five months until it reached around $45 per barrel.
It all makes it seem that it will continue rising and I think it will likely reach $65 - $68 per barrel over the next few months. The reason for that expectation is my technical analysis, which is based on a simple but effective rule: in technical analysis the corrective waves usually form in threes, with the first and the third wave usually being with the same height. That is exactly what we can see on the chart – the beginning of a third corrective wave to the upside.
Of course, oil is a strategic resource and its extraction and sale depend on powerful economic interests, so not everything depends on technical analysis. Keeping in mind the OPEC members’ decision from yesterday to curb oil output, I think that my expectation based on technical analysis about the oil price will come very close to reality.