After the sharp rally toward 119 in early March, crude oil has spent the past several weeks in a corrective phase, and current price action may now be signaling the next major move lower. As previously discussed, the initial decline from the March highs unfolded in a strong impulsive structure for wave A, followed by a three-wave corrective rebound that reached the 118.55 resistance area. Although the market experienced an aggressive sell-off during the first half of April, prices managed to stabilize around the 82 region, where several additional swings have since developed.
From an Elliott Wave perspective, the structure increasingly resembles a bearish triangle formation within wave B. Importantly, all five internal legs, labeled a-b-c-d-e, can now potentially be counted, suggesting that the correction may be approaching completion. In addition, the latest 24-hour price action has delivered another strong sell-off, reinforcing the idea that the energy sector could be preparing for another temporary move lower, likely toward the lower boundary of the broader triangle range. From a technical standpoint, we still believe that the unfilled gaps near 87 and 67 remain important downside targets that could eventually be revisited.
A very similar technical setup can also be observed on Exxon Mobil Corporation (XOM). The stock experienced a sharp and impulsive decline, followed by an ABC corrective recovery that pushed directly into a major GAP resistance zone near the 164 level. From this area, Exxon Mobil may now be vulnerable to renewed downside pressure, especially if crude oil continues to weaken. The correlation between crude oil and energy equities remains strong, and if the bearish triangle scenario on oil is confirmed by a broken trendline support then Exxon Mobil could follow with a continuation lower as well.
It is also worth monitoring geopolitical developments, particularly ongoing discussions surrounding a potential agreement between the United States and Iran. Former President Donald Trump has repeatedly suggested that negotiations may be nearing completion. Any progress toward a deal could increase expectations of additional oil supply entering global markets, which may further pressure crude oil prices and energy-related stocks in the near term.
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