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🌊 WTI Crude Oil: Navigating the Major Correction After the Peak
The core perspective for WTI Crude Oil (OILUSD) is that the powerful, multi-year rally has successfully concluded its primary upward phase. The significant top achieved at $126.28 on March 6, 2022, is interpreted as the completion of Blue Wave /1/.
This suggests that the entire move—a strong rally consisting of five red sub-waves starting from the $6.79 low recorded on April 21, 2020—is now structurally complete. According to Elliott Wave theory, after a five-wave impulse (Wave 1), a prolonged three-wave correction (Wave 2) must follow.
The Challenge of Blue Wave /2/ Correction
The market is currently unfolding the necessary correction, labeled as Blue Wave /2/.
The nature of corrections is notoriously complex, and this one is proving to be no exception. At the time of this analysis (June 2022), the exact shape and path of this corrective wave were difficult to pinpoint precisely. We were considering a few possibilities:
- A Simple Flat Correction: This would unfold as a three-wave structure, Blue A-B-C. This is a common and relatively straightforward corrective pattern.
- A Complex Correction: This could take the form of a Blue WXY (double zigzag) or a Blue WXYXZ (triple zigzag), where the price moves sideways for a longer duration, exhausting the market participants.
Ultimately, the market reveals its path over time, and patience is crucial during these complex phases. The fundamental rule remains: the correction (Blue Wave /2/) must be completed before the next massive impulsive wave (Blue Wave /3/) can begin.
🧐 Focusing on the Current Leg: Green Wave A
Despite the uncertainty surrounding the entire Blue Wave /2/ structure, we can break down its initial phase, which is currently unfolding as the Blue Wave A (assuming it's a flat correction or the first wave 'W' of a complex correction).
Within this initial down-move, the price action suggests a clear three-wave structure is developing:
- Green Wave a (Completed): This first downward swing finished at $92.32. This established the initial magnitude of the correction.
- Green Wave b (Unfolding as a Triangle): Following the initial drop, the market reversed into a congestion zone, forming Green Wave b. This wave is taking the shape of a contracting triangle. A triangle is a five-wave corrective pattern (A-B-C-D-E) that consolidates price, preparing for a strong move out of the pattern. The presence of a triangle in this position confirms that the trend is paused and energy is building.
- Green Wave c (Unfolding): We are currently in the final leg of this three-wave sequence, the Green Wave c. This wave is expected to be an impulse, matching the direction of Green Wave a, and driving the price lower to complete the entire Blue Wave A.
The Downside Target
The minimum technical target for the completion of Green Wave c is determined by its relationship to Green Wave a. A common guideline for simple corrections suggests that the c wave should terminate at or just below the price level where Green Wave a concluded.
- Target Area: Therefore, the immediate downside target for Crude Oil is near the $92.00 area, which aligns closely with the prior Green Wave 'a' low of $92.32.
Reaching this target would mark the completion of the first major downward corrective wave, Blue Wave A, setting up the subsequent relief rally (Blue Wave B) and the final decline (Blue Wave C) to complete the entire Blue Wave /2/ correction.
📈 Strategic Trading Outlook: Waiting for the Right Entry
Given the current position—trapped inside the complex Green Wave b triangle, with the market preparing for a final short downward move (Green Wave c) before a reversal (Blue Wave B) is likely—no immediate trades were advised at the time.
For traders looking for a lower-risk entry point to rejoin the major correction:
- The Best Strategy is Patience: Traders are advised to wait for the price to complete the minor downward thrust to the $92.00 target, rally, and then retest the previous major high near the $121.42 area.
- Ideal Selling Zone: A retest of the $121.42 area would serve as an excellent risk-defined opportunity for a sell trade. This assumes the price movement from $92 up to $121.42 is the Blue Wave B correction, making the subsequent drop (Blue Wave C) the final and most profitable wave to trade in the major correction. Entering a sell trade near the high of Wave B, with a stop just above the $126.28 top, offers a superior risk-to-reward profile for capturing the bulk of the larger correction.
The overall message remains: the dominant phase is corrective (Blue Wave /2/), and patience is required to select the optimal, highest probability entry point.
Trading Tips & Risk Guidance
If you’re following this EURCAD forecast, aim for a 1:1.5 risk-to-reward ratio when stop or target levels aren’t predefined. Focus on trading during lower volatility sessions and look for confirmation through candle closes beyond key support or resistance areas. Avoid entries during major EUR or CAD news events, since they can cause unpredictable price spikes or slippage.
Patience is often the difference between a good trade and a great one. Wait for confirmation, respect your stop loss, and let the setup develop naturall
Quote of the Day
“Trends reward the observant — not the impulsive.”
Crucial Risk Management Advice
Crucial Advice: Effective trading is based on disciplined risk management, not prediction certainty. Always use a firm stop-loss to protect your capital. Macroeconomic news, particularly from the Federal Reserve or the European Central Bank, can override any technical pattern instantly.
About the Author
Ghulam Muhiuddin, Certified Technical Market Analyst
Experience: This analysis reflects the insights gained from 18 Years of consistent market analysis and forecasting, specializing in the application of the Elliott Wave Principle and advanced technical structures.
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