Primary wave 5 is in its early stages.

The Elliott wave count remains the same.

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 downward trend is at 49.96 – 48.52 which may be met in four days time.

Changes and additions to last analysis are bold.

MONTHLY ELLIOTT WAVE COUNT

US Oil Elliott Wave Chart Monthly 2014
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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 push up a parallel copy to contain all 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
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Primary wave 4 is very likely to now be complete. The channel about intermediate wave (C) is comfortably breached.

Within the new downward trend, a first wave is an incomplete impulse and this is most likely minor wave 1.

Within minute wave iii, minuette wave (iii) is 0.17 short of 2.618 the length of minuette wave (i), minuette wave (ii) was a shallow 0.47 zigzag, and minuette wave (iv) exhibits good alternation as a more shallow 0.32 double combination.

At 49.96 minuette wave (v) would reach equality in length with minuette wave (i). At 48.52 minute wave iii would reach 4.236 the length of minute wave i. This gives a 1.44 target zone for the end of minute wave iii. Minute wave iv to follow may be expected to be a very shallow zigzag, zigzag multiple or triangle to exhibit alternation with the deep combination of minute wave ii.

Minute wave iv to come may not move into minute wave i price territory above 58.74.

The trend channel drawn about minor wave 1 down is a best fit. The upper edge may be where minute wave iv finds resistance.

TECHNICAL ANALYSIS

US Oil Elliott Wave Chart Daily 2014
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ADX is now very 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.

The market has been falling of its own weight; not all falls in price have been supported by an increase in volume. This is okay, price can fall due to an absence of buyers and so may fall on light volume. At the end of each fall over the last seventeen days volume increased on the last day down. This pattern may repeat. As at the end of this week there was no increase in volume, so it may be quite likely that next week price will continue to fall. Look out for a down day which shows an increase in volume to indicate a potential short term low.

On Balance Volume very slightly agrees with price; as price falls OBV trends lower. The last low in price to end the week corresponds with a very slight new low on OBV.

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

This regular technical analysis agrees with the Elliott wave count.

TREND LINES

US Oil Elliott Wave Chart Daily 2014
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The two aqua blue lines are drawn using Magee’s approach as outlined in the classic “Technical Analysis of Stock Trends”. These were both breached on 15th May indicating a trend change. Since the breach price has moved lower.

The other trend lines are my own. I use this approach to indicate potential areas of support and resistance.

This analysis is published about 12:34 a.m. EST.