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.