Downwards movement was expected.
The session for 21st October provided confirmation of a trend change when it clearly breached the channel.
Summary: Downwards movement should continue towards 26.86. The target may be met in another 44 days.
New updates to this analysis are in bold.
MONTHLY ELLIOTT WAVE COUNT
US Oil has been in a bear market since August 2013. While price remains below the upper edge of the maroon channel drawn here and below the 200 day simple moving average it must be accepted that the bear market most likely remains intact. I will not publish a bull wave count while this is the case and while there is no technical confirmation of a trend change from bear to bull.
The structure of cycle wave c is incomplete.
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.
It is just possible that cycle wave c could be complete at the last low of 37.75. However, that would see cycle wave c truncated by 5.05, which is a large truncation. I would consider this possibility only if it is confirmed with a clear breach of the maroon channel on the monthly chart.
Within cycle wave c, primary wave 5 is expected to be extended which is common for commodities.
Within primary wave 5, no second wave correction may move beyond its start above 62.58.
Draw a channel about this unfolding impulse downwards. Draw the first trend line from the highs labelled primary waves 2 and 4 then place a parallel copy on the end of primary wave 3. Next push up the upper trend line slightly to contain all of primary waves 3 and 4. Copy this channel over to the daily chart. The upper edge should provide resistance.
DAILY ELLIOTT WAVE COUNT
The channel drawn on the daily chart for last analysis was clearly breached by a full daily candlestick below it and not touching the lower edge on 21st October. This provided trend channel confirmation that intermediate wave (2) was over and intermediate wave (3) had most likely begun.
The invalidation point may be moved lower now that there is confirmation of a trend change. Within intermediate wave (3), no second wave correction may move beyond its start above 50.93.
At 26.86 intermediate wave (3) would reach equality in length with intermediate wave (1).
Intermediate wave (1) lasted 53 days, two short of a Fibonacci 55. Intermediate wave (2) lasted a Fibonacci 34 days. If intermediate wave (3) is equal in duration as well as length to intermediate wave (1), then it may continue now for a further 44 days to last a total Fibonacci 55. Give or take up to two days either side of this expectation would be reasonable.
The final target remains the same. At 22.21 primary wave 5 would reach 0.618 the length of primary wave 3. If this target is wrong, then it may not be low enough.
Extend the triangle trend lines from minor wave B outwards. The point in time at which they cross over may see a trend change. This would be the 18th of November. This method does not always work, but it works often enough for it to be a tendency to look out for. It may be that minor wave 1 completes on 18th of November.
The bright aqua blue channel is a best fit. Each time price touches the upper edge the strength of that line is reinforced. When price trends within a channel the edge of the channel may provide an indication of entry points to join the trend.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Volume is still declining which indicates price may remain within a consolidation. The return of price to below the horizontal trend line, and a throwback to that line, is bearish.
The market may fall of its own weight. It does not require an increase in sellers for price to fall, only an absence of buyers. During the last big downwards move for US Oil there were periods of time where price fell on declining volume for several days. This may be happening again.
Price has come down to find support at the horizontal trend line which previously provided support. A break below this line would provide further confidence that the consolidation is over and a new downwards trend is beginning.
ADX is only slightly rising and still below 15. If the black ADX line rises above 15 a new downwards trend would be indicated. The red -DX line is above the green +DX line and so the trend would be down.
On Balance Volume has broken below the short held blue line. This is a weak bearish signal.
ATR indicates the range price is moving in continues to decline. This supports ADX in indicating the market most likely is range bound and not yet trending. If ATR turns upwards a new trend may be indicated.
When ATR has been flat or declining for long periods of time it should be expected that it will again turn upwards. The consolidation is very mature, a breakout should occur shortly.
Overall, this regular technical analysis supports the direction expected by the Elliott Wave count, but it does not quite yet support the idea of a new trend. There the Elliott Wave analysis may be an earlier indicator of a new downwards trend. When the regular TA supports the EW count I would have more confidence in the EW count.
This analysis is published about 05:15 p.m. EST.