Crude oil has been trading south for the last couple of months, but the price action is not so strongly bearish anymore and the wave structure is getting overlapped. It means that Crude oil is running out of steam within an ending diagonal (wedge) shape.
Well, with current break out of that wedge pattern and with recovery above the upper ending diagonal line, seems like Crude oil found the support. However, from technical point of view keep in mind that bulls can be confirmed only above 97.50 region.
One of the main reasons why Crude oil can be supportive is bearish USDMXN as they are in negative correlation. Looking at the USDMXN daily chart we can see it clearly bearish, currently finishing a big bearish triangle formation within wave B. So, it can send the price even lower within wave C towards February 2020 pandemic lows.
Respecting the price action from technical point of view and wave structure from Elliott wave perspective, seems like USDMXN will face more weakness, while Crude oil may start recovering in an impulsive fashion.
However, my wave counts suggest a BIG drop in Crude Oil...
Let me know what you think. Thanks.
SpyMasterTrades
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Interesting analysis. Could you help me better understand your thought process behind why a weak USDMXN would, on a fundamental level, support higher crude oil prices?
ew-forecast
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@spy_master, Rates in Mexico much higher, just cant wait on this pair to break down when FED is going to be forced to slow down the hawks. Also, USDMXN is one of a few pairs trapped in a triangle, sideways consolidation, having hard time to beat the MXN despite strong USD index. I think USD index is going to find some top in upcoming months, and a deeper correction should be easy for USDMXN to break down.
Many are keen on pushing OIL prices higher now...
However, my wave counts suggest a BIG drop in Crude Oil...
Let me know what you think. Thanks.