In our March 11, 2016 crude analysis, we have mentioned the upside potential that crude had by following a bullish channel that target $40-$42 price area (see chart below).

Crude 1H 11-03-2016

As seen from this recent chart, crude completed wave iv as a running flat corrective wave (a-b-c). The target for wave v is the upper-bound of the channel at $41.20 – $41.50. Considering this structure and a 5-wave up move from wave iv, we might expect a temporarily top in crude today and a turning down next week.

We need to see a breach below $39 and then below the lower-bound of the channel, in order to confirm the top in crude.

 

Crude 1h Update - Mar 18

Trade Setup:

We will start a small short position at the upper-bound of the channel and keep stops tight.

If we see a move below $40.50 again, we will start pyramiding until support at $39.00.

Stop Loss = Breach of upper bound

Target 1 = $37

Target 2 = $35

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