Sideways movement, which has not made a new high, this week fits the main Elliott wave count better than the new alternate.
Summary: Assume the upwards trend remains intact while price remains within the yellow channel on the daily chart. Only if that channel is breached by downwards movement should a high be assumed to be in place.
A new high now above 74.96 would provide a strong indication that Oil may be in a long term bull market. The target would be at 80.64, but a large correction for a big fourth wave would be expected prior to the target being reached.
New updates to this analysis are in bold.
MAIN WAVE COUNT
MONTHLY CHART
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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.
There is alternation in depth with primary wave 2 very deep and primary wave 4 relatively shallow. There is inadequate alternation in structure, both are zigzags. So far primary wave 4 has lasted 23 months. At this stage, there is almost perfect proportion between primary waves 2 and 4.
Primary wave 4 may not move into primary wave 1 price territory above 74.96.
The wider Elliott channel (teal) about this whole movement may offer support to primary wave 5.
Price last week has closed above the teal resistance line, the upper edge of this very wide channel. This wave count expected it would be fairly likely that primary wave 4 should have found resistance there. Because this line is now breached on the daily chart a new alternate is considered below.
WEEKLY CHART
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Primary wave 4 subdivides as a zigzag, and within it intermediate wave (C) may now be complete. If primary wave 5 were to only reach equality in length with primary wave 3, it would end with a small truncation. A target for primary wave 5 may best be calculated at intermediate degree. That can only be done when intermediate waves (1) through to (4) within primary wave 5 are complete.
An Elliott channel is added to this possible zigzag for primary wave 4. A breach of the lower edge of this channel would provide a very strong indication that primary wave 4 should be over and primary wave 5 should be underway.
DAILY CHART
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Intermediate wave (C) may now be complete at all degrees. However, the yellow best fit channel must absolutely be breached by downwards movement before any confidence that a high is in place may be had.
Assume the trend remains the same, upwards, while price remains within the channel. This wave count is at the point now where it requires channel confirmation.
If primary wave 4 continues any higher, it may not move into primary wave 1 price territory above 74.96.
Although the small downwards movement from the high of primary wave 4 this week looks like a three on the daily chart, it will subdivide as either a three or a five on the hourly chart. This wave count remains viable.
ALTERNATE WAVE COUNT
MONTHLY CHART
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It is possible that the bear market for Oil is over and a new bull market is in the very early stages.
A huge zigzag down to the last low may be complete and is labelled here Super Cycle wave (II).
Cycle wave b must be seen as complete in August 2013 for this wave count to work. It cannot be seen as complete at the prior major swing high in May 2011.
Cycle wave b is seen as a zigzag, and within it primary wave B is seen as a running contracting triangle. These are fairly common structures, although nine wave triangles are uncommon. All subdivisions fit.
Primary wave C moves beyond the end of primary wave A, so it avoids a truncation. But it does not have to move above the price territory of primary wave B to avoid a truncation, which is an important distinction.
If cycle wave b begins there, then cycle wave c may be seen as a complete five wave impulse.
Super Cycle wave (III) must move beyond the end of Super Cycle wave (I). It must move far enough above that point to allow room for a subsequent Super Cycle wave (IV) to unfold and remain above Super Cycle wave (I) price territory.
WEEKLY CHART
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If a new bull market is in the very early stages for Oil, then it may have begun with two overlapping first and second waves at primary then at intermediate degree.
Primary wave 3 may only subdivide as an impulse, and within it intermediate wave (3) may be incomplete. The target assumes the most common Fibonacci ratio to intermediate wave (1).
Intermediate wave (4) may not move into intermediate wave (1) price territory below 55.24.
TECHNICAL ANALYSIS
MONTHLY CHART
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The strongest recent monthly volume is for the downwards month of August 2017. This is bearish.
For the now completed month of January the rise in price had support from volume. This is bullish. MACD and On Balance Volume are also both bullish. Overall, this chart is more bullish than bearish.
RSI indicates there is room for upwards movement to continue.
DAILY CHART
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It looks like the upwards trend is being interrupted by a consolidation. However, strong volume for downwards movement within Friday’s session is fairly bearish, at least for the short term.
Watch On Balance Volume carefully next week. A signal here should be given reasonable weight.
VOLATILITY INDEX
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Prior short term bearish divergence has now been followed by some small downwards movement. This divergence may now be resolved. There is no new divergence noted this week.
Published @ 08:45 p.m. EST on 3rd February, 2018.