Asia stocks climb tracking Wall St rally; Nikkei hits record high, China GDP beats
The Elliott Wave Principle (EWP), a cornerstone of technical analysis, provides traders and investors with a framework for timely identifying reversals and new market trends. As such we already gave a Bullish update to on January 31st, looking for at least $84+/-2.
Applied to Brent crude oil, recent price action suggests that the commodity is approaching the final stages of a classic five-wave pattern, with the current rally likely marking the completion of the 5th wave. See Figure 1 below.
Figure 1. Elliott Wave Count of Brent Oil’s Advance Since Its December 2025 Low
In EWP terms, the pattern consists of three impulsive waves (waves 1, 3, and 5) and two corrective waves (2 and 4). Brent oil started its latest cycle with a strong advance, red W-i followed by a moderate correction, W-ii and then surged in a powerful third wave: red W-iii. The fourth wave retraced some gains, consolidating before the current move upward.
Historically, the 5th wave tends to attract late buyers, often culminating in a price peak before a significant correction or reversal. For Brent oil, the technical indicators and price’s momentum now point to a possible exhaustion as the 5th wave unfolds as there are signs of bearish divergences on momentum indicators, red dotted arrows, and price is nearing resistance near its previous May 2022 closing high of around $112.6. All reinforce the likelihood of a near-term top. Traders should be vigilant for reversal signals, as the completion of the 5th wave will usher in an ABC corrective phase, leading to lower prices in the weeks ahead. A break below the red W-iv low at $96.78 -the red warning level for the Bulls- will signal that the black W-2/b to ideally $77.50+/-5 is underway.
In summary, the Elliott Wave count for Brent oil indicates that the market is nearing a pivotal turning point. As the 5th wave tops out, risk management and careful monitoring of technical signals become crucial for market participants seeking to navigate the next phase of price action.