The stock market wasn’t the only place that took a hit following Trump’s global tariffs announcement. Trade barriers of any kind are known to slow economies down, which in turn leads to lower energy consumption. So it is not surprising that WTI crude oil plunged sharply, as well, with the price per barrel falling almost 10% last week. OPEC’s planned production increase only exacerbated the selloff.
But in reality, that crash was put in motion more than two months earlier. Everything that happened last week was just a catalyst for a move, which had been in progress since January. And it was on January 15th, when Elliott Wave analysis warned us. That’s before Trump’s inauguration, not to mention his tariffs.
After examining the weekly and daily charts, we turned our attention to the 4-hour chart of WTI crude oil. It revealed two consecutive three-wave structures, marked a)-b)-c) to the downside in wave 1 and w)-x)-y) to the upside in wave 2. The latter was already approaching the upper line of its corrective channel.
With the bigger picture in mind, we thought that a bearish reversal near $80 and a selloff to the low-$60s a barrel can be expected as long as $84.50 was intact. Note that because of the pattern we thought was under construction, the anticipated decline in wave 3 was also supposed to consist of three waves. More than two and a half months later now, the updated chart below shows how the situation unfolded.
$84.50 was never put to the test. The upper line of the corrective channel enveloping wave 2 caused a bearish reversal at $80.76. Wave 3 developed as a three-wave a)-b)-c) structure down to $60.44 so far on Friday, April 4th.
Obviously, when we made that prediction in mid-January, we didn’t have any idea what was going to happen in Trump’s head two months later. Nor did we have any insight into OPEC’s production plans. Instead, all it took was an eye for Elliott Wave patterns and knowledge of the rules that govern them.