An update to last analysis expected downwards movement to a target at 38.33. Price moved lower to reach 37.50 so far.
Summary: A diagonal structure may have just completed today, this indicates a sharp correction should unfold upwards before the downwards trend resumes. However, this week the regular technical analysis does not support the Elliott wave count. For this reason an upwards correction should not be assumed to have begun until a green daily candlestick is seen. The trend is down. Corrections are an opportunity to join the trend.
New updates to this analysis are in bold.
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MAIN DAILY 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.
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.
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. If minute wave iii is over at the low today, it would have lasted 24 days.
Minute wave iv should be longer than minute wave ii because the diagonal is expanding. The minimum for minute wave iv is 43.26. 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.
Minute wave iv must subdivide as a zigzag.
At this stage, it looks likely that minute wave iii is complete and minute wave iv should begin. The lower diagonal trend line is tested three times now, so this line should offer strong support. However, there is no confirmation of a trend change and the end of minute wave iii yet. This wave count comes with the strong caveat that confirmation is required in the form of a green daily candlestick before confidence may be had that minute wave iv has begun.
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. Intermediate wave (3) may now complete in a total Fibonacci 89 days (give or take up to two either side of this number).
ALTERNATE DAILY ELLIOTT WAVE COUNT
The other structural possibility for the start of intermediate wave (3) down is an impulse. The subdivisions do not have as good a fit, particularly minute wave c within minor wave 2 (it looks like a three and this wave count must see it as a five). But apart from that, this wave count is entirely possible.
If downwards movement has begun with a series of overlapping first and second waves, then this wave count expects downwards movement to resume more quickly and to show a strong increase in momentum.
Minuette wave (i) subdivides as a leading expanding diagonal. Leading diagonals in first wave positions are normally followed by very deep second wave corrections. Minuette wave (ii) may be expected to reach at least to the 0.618 Fibonacci ratio of minuette wave (i) at 41.08, and very likely higher. It may not move beyond the start of minuette wave (i) above 43.36.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price is falling on increased volume. ADX indicates a downwards trend is in place. This does not support the Elliott wave counts for the short term.
RSI is not oversold, no low is indicated.
ATR agrees with ADX, as it is increasing and indicating a new trend.
On Balance Volume has just broken below a short held support line (blue) and reached the next possible line of support (orange).
Because this regular technical analysis indicates more downwards movement, and there is no indication of a sharp correction to begin here, that is why the Elliott wave count comes with the strong caveat that a green daily candlestick is required for confirmation of a correction.
The trend is down. Corrections are an opportunity to join the trend.
This analysis is published about 02:54 a.m. EST on 8th December, 2015.