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Last analysis expected downwards movement.

Price has moved overall lower for the week.

Summary: Overall, the mid term trend for Oil still looks to be down. A second wave correction is likely to have ended four sessions ago. Downwards movement should show an increase in momentum for the next week. The only concern today is a strong upwards session for the 28th of November with strong support from volume.

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 a flat correction. This is also classified as a three.

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.

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.

Within minor wave C so far, the downwards wave labelled minute wave i looks like a five and now minute wave ii upwards looks like a three. So far, with a five down and three up, it looks like the trend direction for Oil is down.

The green spinning top candlestick for the session of the 28th of November may have been a backtest to test resistance at the lower edge of the green channel.

This wave count expects to see some increase in downwards momentum for the next week.

At 33.46 minute wave iii would reach 1.618 the length of minute wave i.

Minute wave ii may not move beyond the start of minute wave i above 51.93.



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

The strong red daily candlestick for the 25th of November did not have support from volume. Now the strong green daily candlestick for the 28th of November does have support from volume. This suggests that bulls may have energy left to push price higher here.

Resistance should still be expected about 49.25.

While price has essentially been moving overall higher since the last swing low on the 14th of November, ATR has been increasing. ATR suggests an upwards trend may be in place.

ADX disagrees though and indicates the market is consolidating: the +DX and -DX lines are whipsawing about each other.

Bollinger Bands agree as they contract.

On balance, it is concluded that this upwards movement is most likely a counter trend movement. The mid term trend may still be down.

On Balance Volume trend lines are redrawn. Resistance may be expected at the purple line and support at the yellow line. A break out of this range may indicate the next direction for price.

This correction has brought Stochastics up to overbought. If price does move a little higher before it turns, if any divergence is exhibited between price and Stochastics, then expect an imminent reversal. A downwards reaction is a reasonable expectation about here.

RSI is neutral. There is room for price to rise or fall.

This analysis is published @ 09:15 p.m. EST.