US OIL Elliott Wave Technical Analysis – 30th July, 2015

Price continues to move lower as expected.

Summary: Fifth waves on commodities are often very swift and strong. The target for this one to end is at 21.96 and may be met in another six months time. A shorter term target for an interruption to the downwards trend is recalculated at 42.87.

Changes and additions to last analysis are bold.

MONTHLY ELLIOTT WAVE COUNT

US Oil Elliott Wave Chart Monthly 2014
Click chart to enlarge.

This wave count sees US Oil as within a big super cycle wave (II) zigzag. Cycle wave c is highly likely to move at least slightly below the end of cycle wave a at 32.70 to avoid a truncation. Cycle wave c may end when price touches the lower edge of the big teal channel about this zigzag.

Within cycle wave c, primary wave 5 is expected to be extended which is common for commodities.

Primary wave 4 may not move into primary wave 1 price territory above 91.76.

Draw a channel about this unfolding impulse downwards. Draw the first trend line from the lows labelled primary waves 1 and 3 then place a parallel copy on the end of primary wave 2. Copy this maroon trend line carefully over to the daily chart.

DAILY ELLIOTT WAVE COUNT

US Oil Elliott Wave Chart Daily 2014
Click chart to enlarge.

A first wave down is still incomplete. There is no Fibonacci ratio between minor waves 1 and 3. This means there is very likely to be a Fibonacci ratio between minor wave 5 and either of 1 or 3. At 42.87 minor wave 5 would reach equality in length with minor wave 1. Minor wave 5 may end in another eleven days if it lasts a total Fibonacci twenty one days / sessions.

Draw a channel about intermediate wave (1) using Elliott’s first technique: draw the first trend line from the ends of minor waves 1 to 3 then place a parallel copy on the end of minor wave 2. This channel is no longer a perfect fit. It is now breached by two daily candlesticks, but it was not breached with upwards movement and so the breach may not be an indicator that intermediate wave (1) is over.

Minor wave 5 may be a typically swift strong fifth wave (it does not have to be, but this is a tendency of commodities so look out for it). If that happens, then the lower edge of the channel may not provide support. If price breaks below the lower edge of the channel, then downwards momentum may increase substantially.

Within minor wave 5, minuette wave iv may not move into minuette wave i price territory above 50.14.

I have looked to see if the structure for intermediate wave (1) could be complete, and the final fifth wave looks like it still needs to move lower. I do not think downwards movement will be interrupted yet by a larger correction.

TECHNICAL ANALYSIS

US Oil Elliott Wave Chart Daily 2014
Click chart to enlarge.

ADX is no longer as clear; it is flattening off. If it turns back up in the next one or two days, then I would have more confidence in the Elliott wave count.

The bright aqua blue trend channel may be a better fit for this downwards movement now than the Elliott channel. The upper trend line especially so.

There is a slight cause for concern that the two upwards days of the most recent correction came with rising volume; if this was a correction it may be expected to more likely come with falling volume. That rise in price was supported by volume and may be an indicator that a larger upwards movement could unfold from here. This is in opposition to the Elliott wave count.

With RSI and Stochastics both now returning from oversold, there is again room for price to fall.

To have more confidence in a downwards trend, I would want to see a downwards day with stronger volume than the prior two upwards days and ADX to turn up again.

This analysis is published about 04:50 a.m. EST.

US OIL Elliott Wave Technical Analysis – 26th July, 2015

Primary wave 5 is still in its early stages.

The Elliott wave count is adjusted and the target is recalculated.

Summary: Fifth waves on commodities are often very swift and strong. The target for this one to end is at 21.96 and may be met in another six months time. A shorter term target for an interruption to the downwards trend is recalculated at 42.87.

Changes and additions to last analysis are bold.

MONTHLY ELLIOTT WAVE COUNT

US Oil Elliott Wave Chart Monthly 2014
Click chart to enlarge.

This wave count sees US Oil as within a big super cycle wave (II) zigzag. Cycle wave c is highly likely to move at least slightly below the end of cycle wave a at 32.70 to avoid a truncation. Cycle wave c may end when price touches the lower edge of the big teal channel about this zigzag.

Within cycle wave c, primary wave 5 is expected to be extended which is common for commodities.

Primary wave 4 may not move into primary wave 1 price territory above 91.76.

Draw a channel about this unfolding impulse downwards. Draw the first trend line from the lows labelled primary waves 1 and 3 then place a parallel copy on the end of primary wave 2. Copy this maroon trend line carefully over to the daily chart.

DAILY ELLIOTT WAVE COUNT

US Oil Elliott Wave Chart Daily 2014
Click chart to enlarge.

A first wave down is still incomplete. I am moving the degree of labelling within it up one and moving the third and fourth wave lower. There is no Fibonacci ratio between minor waves 1 and 3. This means there is very likely to be a Fibonacci ratio between minor wave 5 and either of 1 or 3. At 42.87 minor wave 5 would reach equality in length with minor wave 1. Minor wave 5 may end in another eleven days if it lasts a total Fibonacci twenty one days / sessions.

Draw a channel about intermediate wave (1) using Elliott’s first technique: draw the first trend line from the ends of minor waves 1 to 3 then place a parallel copy on the end of minor wave 2. This channel is a perfect fit. Only when price clearly breaches the upper edge of the channel with a full daily candlestick will I expect that intermediate wave (1) is over. While price remains within the channel expect the downwards trend to continue and upwards corrections to find resistance at the upper edge of the channel.

Minor wave 5 may be a typically swift strong fifth wave (it does not have to be, but this is a tendency of commodities so look out for it). If that happens, then the lower edge of the channel may not provide support. If price breaks below the lower edge of the channel, then downwards momentum may increase substantially.

Within minor wave 5, minute wave iv to come may not move into minute wave i price territory above 50.89.

TECHNICAL ANALYSIS

US Oil Elliott Wave Chart Daily 2014
Click chart to enlarge.

ADX is still clear. The ADX line is above 20 and rising indicating a trend which is strengthening. The -DX line (red dashed) is above the +DX line (green solid) indicating the trend is down.

When a market is trending, then a trend following system should be used for trading. The simplest trend following system uses lines of support and resistance. For a downwards trend, upwards movement may be expected to be corrections against the trend and should end when price finds resistance. As each short term high is made it should not be exceeded again for some time. A trend should be assumed to continue while ADX continues to rise and price remains below resistance.

For the last three days, volume is overall increasing while price has fallen. The fall in price is now supported by volume.

On Balance Volume now agrees with price; as price falls OBV trends lower.

The shorter EMA is below the longer EMA, indicating the trend is down.

This regular technical analysis agrees with the Elliott wave count.

RSI is showing slightly oversold, but there is no divergence with price and RSI is not oversold yet at the weekly chart level. Only when there is clear divergence with price and RSI, then at the daily and weekly chart level would I expect a larger interruption to the downwards trend. For US Oil RSI can remain below 30 for reasonable periods of time before a low is found.

TREND LINES

US Oil Elliott Wave Chart Daily 2014
Click chart to enlarge.

I use parallel trend lines to indicate potential areas of support and resistance.

This analysis is published about 05:30 a.m. EST.

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