Last analysis expected more downwards movement for the week which is what happened.
Summary: Upwards movement is expected for the next week to a minimum at 45.65. A new high above 48.36 is possible but unlikely. When a zigzag upwards is complete, then a trend change and more downwards movement is expected.
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.
MAIN DAILY ELLIOTT WAVE COUNT
Intermediate wave (3) must subdivide as an impulse.
Within intermediate wave (3), minor wave 1 may be beginning as a leading diagonal. Minute wave iii is longer than minute wave i, so the diagonal would be expanding.
This is the main wave count because of the channel (maroon, copied over from the monthly chart). While price is reasonably close to the upper edge it looks most likely that intermediate wave (2) is over. Were intermediate wave (2) to continue further, it may have to breach the channel in order to complete.
The first, third and fifth waves are most commonly zigzags within a leading diagonal, but sometimes they may also be impulses. This is why minute waves i and iii are labelled as zigzags.
Minute wave i lasted 12 days, one short of a Fibonacci 13. Minute wave ii lasted a Fibonacci 5 days. Minute wave iii lasted 12 days, equal in duration to minute wave i and one short of a Fibonacci 13. Minute wave iv may be expected to last either a Fibonacci 5 or 8 days, with 8 more likely.
Minute wave iv should be longer than minute wave ii because the diagonal is expanding. The minimum for minute wave iv is 45.65. The diagonal trend lines must diverge.
Minute wave iv must overlap back into minute wave i price territory above 42.60. It may not move beyond the end of minute wave ii above 48.36.
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 23 days to last a total Fibonacci 55. Give or take up to two days either side of this expectation would be reasonable.
ALTERNATE DAILY ELLIOTT WAVE COUNT
It is also possible that intermediate wave (2) is continuing. The only reason for making this an alternate is if it does continue, then it will possibly breach the upper edge of the maroon channel. That would not have the right look at the monthly chart level. I would expect the upper edge of that channel to provide strong resistance while Oil remains in a bear market.
If intermediate wave (2) does continue, then the most likely structure to remain within the channel would be a double combination. The first structure labelled minor wave W was a zigzag, so the second structure labelled minor wave Y should be a flat correction. Within it minute wave a must subdivide as a three wave structure.
Minute wave b may again be over and is now 1.47 times the length of minute wave a. At 49.21 minute wave c would reach 1.618 the length of minute wave a.
A new high above 48.36 would invalidate the main wave count and confirm this alternate.
Minor wave W lasted a Fibonacci 34 days and minor wave X lasted 12 days (one short of a Fibonacci 13). Minor wave Y may last a total Fibonacci 34 days (give or take up to two either for a reasonable expectation).
Click chart to enlarge. Chart courtesy of StockCharts.com.
Five days of sideways movement on increasing volume is not a normal volume profile. Normally during sideways corrections volume declines. This may indicate a strong breakout is coming.
Price may find resistance at the horizontal trend line at 43.59.
ADX is indicating a downwards trend is in place.
Divergence with price and On Balance Volume is bullish; the recent fall in price is weak. OBV works better with trend lines though in my experience than it does with divergence. OBV may find resistance at the peach coloured trend line. If that line is breached, then the next blue line of resistance is stronger, which should help to stop a rise in price.
This analysis is published about 03:21 a.m. EST.