Oil's (CL) Rally Likely to Stall, Signaling Deeper Losses

The current market cycle for Light Crude Oil (CL), starting from its high on January 15, 2025, is unfolding as a double three Elliott Wave pattern. This technical structure suggests a corrective phase with alternating declines and recoveries. From the peak, the price dropped to 55.12, completing wave (W), followed by a rally to 65.07, marking the end of wave (X). The decline has since resumed in wave (Y), which is breaking down into a WXY pattern, indicating further downside momentum.

Within wave (Y), the initial decline, wave W, is forming as a zigzag. From the wave (X) high, the price fell to 61.53 (wave (i)), then rallied to 63.92 (wave (ii)). The decline continued in wave (iii) to 56.39, followed by a bounce to 59.87 in wave (iv). The final drop in wave (v) reached 55.30, completing wave ((a)) in a higher degree. Currently, wave ((b)) is unfolding as a zigzag, with its first leg, wave (a), reaching 60.26. A pullback in wave (b) is expected soon, followed by a rise in wave (c) to complete wave ((b)).

Looking ahead, as long as the key resistance at 65.07 holds, any rally is likely to fail after 3, 7, or 11 swings, leading to further declines. Traders should watch these levels closely for potential selling opportunities.