Crude: Saudi attack – Will event result into positive breakout?

Crude has shown a historic rise in today’s session post the event on 14^th September when the largest oil processing unit of Saudi Arabia was attacked by a drone. Such events result into high volatility resulting into a huge Gap up in prices today. It is therefore utmost important to know the risk when trading in futures market and how to act during such scenarios.

Now look at the below research on Crude which was published on 8^th August 2019 in the daily monthly research report. It has been more than a month but prices behaved exactly as expected even now.

MCX Crude weekly chart – shown on monthly research on 8^th August 2019

Following was mentioned on 8^th August – MCX Crude post making a low near 2990 levels has witnessed recovery on the upside and has managed to sustain the rise indicating that a short term low might be formed near the same levels. However, it becomes important to analyse the bigger degree structure of this commodity.

Wave perspective: As shown on the weekly chart, post falling steeply and making a low near 2990 levels prices witnessed recovery on upside. Prices are moving in the form of Complex correction pattern and the last set of correction is on-going in the form of wave Z.  If we carefully look at the RSI indicator we can see that the oversold zone for the same has been near 30 levels from where prices bounced off to relieve its zone.

75 Weeks’ Time Cycle: We are showing 75 weeks Cycle on the chart and this cycle has worked amazingly well in capturing the major lows. Post the cycle low formed near 2990 where wave (a) was completed buying was witnessed. So over the short term we can expect prices to consolidate within the range of 3525-4200 levels and post which move towards higher levels and the low of 2990 should be protected on the downside. As per this Cycle the next low is near 8^th of June, 2020. 

Understanding the internal structure: To show the internal structure we are showing the daily chart of Crude (shown in actual research report).

In short, Crude has continued to be in limelight and the trend over the short term looks to be range bound between 3500-4200 levels….

Happened: Crude made a low near 3624 levels since then and showed a sharp recovery on upside. Prices essentially traded in a range of 3500 – 4200 as we expected and today we saw a push above 4200 levels. Despite of all the events prices were stuck in a range for more than a month. So, will the event result into a positive breakout?

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