Select Page

The Elliott wave count remains the same.

Classic technical analysis is used to determine if current upwards movement is a new trend or a correction.

Summary: At this stage, upwards movement looks like a deeper correction within a downwards trend. The correction is not over yet and may continue for a few days. The downwards trend still has a minimum Elliott wave requirement at 28.61 and a target at 19.28.

New updates to this analysis are in bold.


US Oil Elliott Wave Chart Monthly 2016
Click chart to enlarge.

Within the bear market, cycle wave b is seen as ending in May 2011. Thereafter, a five wave structure downwards for cycle wave c begins.

Primary wave 1 is a short impulse lasting five months. Primary wave 2 is a very deep 0.94 zigzag lasting 22 months. Primary wave 3 is a complete impulse with no Fibonacci ratio to primary wave 1. It lasted 30 months.

Primary wave 4 is likely to exhibit alternation with primary wave 2. Primary wave 4 is most likely to be a flat, combination or triangle. Within all of these types of structures, the first movement subdivides as a three. The least likely structure for primary wave 4 is a zigzag.

Primary wave 4 is likely to end within the price territory of the fourth wave of one lesser degree; intermediate wave (4) has its range from 42.03 to 62.58.

Primary wave 4 may end if price comes up to touch the upper edge of the maroon channel. The upper edge of this channel has been pushed up to sit on the end of intermediate wave (2) within primary wave 3.

Primary wave 4 is most likely to be shallow to exhibit alternation in depth with primary wave 2. So far it has passed the 0.382 Fibonacci ratio at 45.52. It may now continue to move mostly sideways in a large range.

Primary wave 4 may not move into primary wave 1 price territory above 74.96.


US Oil Elliott Wave Chart Daily 2016
Click chart to enlarge.

Intermediate wave (A) fits neatly as a double zigzag. This is classified as a three.

Intermediate wave (B) now looks like may be unfolding as a flat correction. This is also classified as a three.

When both A and B waves subdivide as threes, the larger structure one degree higher is either a flat or triangle. Within a triangle though, no part of intermediate wave (B) should move beyond the end of intermediate wave (A) above 51.67. A new high above 51.67 may have eliminated a possible triangle unfolding at this stage for primary wave 4.

Primary wave 4 looks like it may be unfolding as a flat correction if my analysis of intermediate wave (A) is correct.

Within a flat correction, the minimum depth for intermediate wave (B) is 0.9 the length of intermediate wave (A) at 28.61. Intermediate wave (B) may make a new price extreme beyond the start of intermediate wave (A) below 26.06 as in an expanded flat.

Intermediate wave (B) is unfolding as a flat correction. Within intermediate wave (B), minor wave B is a completed zigzag structure.

Minor wave B is a 1.02 length of minor wave A. This would indicate a regular flat correction. Minor wave B has ended within the normal range of 1 to 1.38 times the length of minor wave A, from 51.67 to 56.41.

Normally, the length for minor wave C would be expected to be about equal with minor wave A, but this would not bring price down to the minimum requirement one degree higher for intermediate wave (B) to be 0.9 the length of intermediate wave (A) at 28.61.

The ratio used to calculate the target is 2.618 the length of minor wave A at 19.28.

Minor wave C downwards must subdivide as a five wave structure. It is unfolding as an impulse. So far, within minor wave C, minute waves i through to iii look to be complete. There is no Fibonacci ratio between minute waves i and iii. Minute wave v is most likely to be a strong extension, most likely to be longer than minute wave iii if the minimum at 28.61 is going to be met.

Minute wave iv is not contained within the Elliott channel drawn here about minor wave C in pink. Sometimes fourth waves breach the channel, and this is why Elliott had a second technique to redraw the channel when the fourth wave was complete. Minute wave iv may not move into minute wave i price territory above 50.22.

At the time of publication of this chart, looking at indicators on the hourly and 15 minute charts, it does not look like minute wave iv is complete and there are no signs of weakness yet.

I have exited my short position. The last half stopped out when price made a new short term swing high above the high of minuette wave (iv) at 45.94. I will wait to see when minute wave iv looks to be complete before entering another short position for the next wave down. This will be notified to members in comments before I place my own trade. Keep watching comments for updates on this market over the next week.



US Oil Chart Daily 2015
Click chart to enlarge. Chart courtesy of

Price is bouncing strongly up from support about 43.00, with a spike below this point. The strong green candlestick for today’s session completes both a bullish engulfing pattern and a Morning Doji Star. Both are bullish reversal patterns.

Candlestick reversal patterns make no comment on how far the next wave may travel. They also do not mean a reversal from down to up or up to down, and they may also indicate a reversal from down to sideways or up to sideways.

This strong upwards day comes with a decline in volume. This indicates the upwards movement so far may be a counter trend movement and not necessarily the start of a new upwards trend.

ADX is slightly declining today indicating the market is no longer trending. It is not quite extreme but close to extreme, which is considered about 35. A consolidation may be required here to bring it back down, so that there is room again for price to fall.

ATR is increasing, disagreeing with ADX. It is possible that this upwards movement may be a new trend.

Bollinger Bands contracted today disagreeing with ATR and agreeing with ADX. With two out of three of these indicators in agreement, it should be assumed for now that upwards movement is a correction.

At the last low, Stochastics indicated divergence with price and was oversold. This indicates a deeper correction to unfold about here or a trend change.

At the last low, RSI did not reach oversold. There is still room for price to fall.

This analysis is published @ 05:50 p.m. EST.