Upwards movement has breached the cyan line which was providing resistance on the last updated US Oil daily chart. This indicates a trend change.
Summary: A correction for minor 4 looks to have arrived and at this early stage it is most likely to be a quick sharp zigzag. The expectation would be for 8 days of upwards movement to the most likely target at 31.47 or 34.16. It may find resistance at the upper edge of the blue channel on the daily chart.
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.
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 has moved below cycle wave a at 32.70 avoiding a truncation. At this stage, as soon as the structure for cycle c could be seen as complete an alternate wave count expecting an end to the Oil bear market would be published. That cannot be done yet because the structure is incomplete. Primary wave 5 has to unfold lower.
When the structure is complete and an alternate bull wave count is published, then it would come with the strong caveat that it is an alternate until there is technical confirmation of a trend change. That confirmation would be a breach of the maroon channel or a break above the 200 day moving average, or both.
Within cycle wave c, primary wave 5 is expected to be extended which is common for commodities.
No second wave correction may move beyond the start of its first wave above 50.93 within intermediate wave (3).
Draw a channel about this unfolding impulse downwards. Draw the first trend line from the lows labelled primary waves 1 to 3, then place a parallel copy up not the high labelled intermediate wave (2), so that all movement is contained. Add a mid line. Copy the channel over to the daily chart.
The wider teal green channel is drawn about this whole correction. Cycle wave c may end when price finds support at the lower edge of this channel. But sometimes these channels are breached by C waves, particularly if the C wave has a swift strong extended fifth wave to end it. How price behaves when it gets to the lower teal trend line, and how complete the structure is at that stage, will indicate if price may stop there or if it would continue.
DAILY ELLIOTT WAVE COUNT
Note: FXCM data stream is closed over the weekend. I am aware the candlestick for Friday is missing. It can be seen on the technical analysis chart below.
Because upwards movement for Friday reached above the high of minuette wave (iv), which here is 31.76 (and for StockCharts data is 32.83), the final fifth wave within minor wave 3 must be over. Upwards movement for Thursday and Friday may not be a second wave correction within minuette wave (v).
Ratios within minor wave 3 are: minute wave iii is 0.89 longer than equality in length with minute wave i, and minute wave v has no Fibonacci ratio to either of minute waves i or iii. There is alternation in structure between the flat of minute wave ii and the zigzag of minute iv. There is almost no alternation in depth.
Minute wave v is a complete impulse. Ratios within it are: there is no Fibonacci ratio between minuette waves (iii) and (i), and minuette wave (v) is 0.2 shorter than equality in length with minuette wave (iii).
The third wave is shorter than the first within the impulse of minute wave v. I did not consider the possibility it could be over because it was shorter and it was more likely to be incomplete and longer lasting. The rule that the third wave is not the shortest is now met; the third wave is longer than the fifth wave which is the shortest.
Minor wave 3 has no Fibonacci ratio to minor wave 1.
Minor wave 2 was a deep expanded flat correction. Minor wave 4 would most likely be shallow and most likely be a zigzag or zigzag multiple. It may be quicker than minor wave 2, so a Fibonacci 8 days is most likely.
The dark blue channel about intermediate wave (3) is a best fit. Minor wave 4 may find resistance at the upper edge.
Minor wave 4 may not move into minor wave 1 price territory above 45.24.
Intermediate wave (3) is still incomplete. Minor waves 4 and 5 are required to complete it.
At 26.1 intermediate wave (3) would reach equality in length with intermediate wave (1). If this target is wrong, it may not be low enough. The target may be calculated at two wave degrees when minor wave 4 is complete. At that stage, it may widen to a zone or it may change.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Overall, as price falls it comes on increasing volume. Apart from high volume for the upwards day of 8th December, as price rises it comes with declining volume. The volume profile is bearish. Upwards movement in price is corrective.
ADX has just turned downwards. With ADX between 30 to 45 and now declining, this indicates a correction from an extreme is most likely. This supports a wave count which expects some more upwards movement, and is supported by the volume profile.
On Balance Volume may come to find resistance at the upper trend line as price moves higher. This may help to stop upwards movement in price, if OBV stops there.
When price reaches resistance and Stochastics is overbought at the same time, that may be an end to an upwards swing. The first line of resistance would be the upper cyan line. The next line would be the first horizontal red line about 37.
This analysis is published @ 01:23 a.m. EST.