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Last week’s end of week US Oil analysis expected a bounce or sideways consolidation had begun. An upwards week this week fits this expectation perfectly.

Summary: A bounce or sideways consolidation for a few weeks is now expected to continue. The target is about 63.71.

A breach of the best fit channel and a Morning Doji Star candlestick pattern on the weekly chart add support to this view.

The larger picture still sees Oil in a new downwards trend to end reasonably below 26.06.

New updates to this analysis are in bold.



US Oil Elliott Wave Chart Monthly 2018
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Classic technical analysis favours a bearish wave count for Oil at this time.

The large fall in price from the high in June 2008 to February 2016 is seen as a complete three wave structure. This large zigzag may have been only the first zigzag in a deeper double zigzag.

The first zigzag down is labelled cycle wave w. The double is joined by a now complete three in the opposite direction, a zigzag labelled cycle wave x.

The purpose of a second zigzag in a double is to deepen the correction when the first zigzag does not move price deep enough. Cycle wave y would be expected to move reasonably below the end of cycle wave w to deepen the correction. Were cycle wave y to reach equality with cycle wave w that takes Oil into negative price territory, which is not possible. Cycle wave y would reach 0.618 the length of cycle wave w at $2.33.

A better target calculation would be using the Fibonacci ratios between primary waves A and C within cycle wave y. This cannot be done until both primary waves A and B are complete.

Within cycle wave y, no second wave correction nor B wave may move beyond its start above 76.90.


US Oil Elliott Wave Chart Weekly 2018
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This weekly chart is now focussed on the start of cycle wave y.

Cycle wave y is expected to subdivide as a zigzag. A zigzag subdivides 5-3-5. Primary wave A must subdivide as a five wave structure if this wave count is correct.

Within primary wave A, intermediate wave (1) may now be complete. Intermediate wave (2) may unfold over a few weeks as a sideways choppy consolidation, or a deep sharp bounce.

Intermediate wave (2) may not move beyond the start of intermediate wave (1) above 76.90.


US Oil Elliott Wave Chart Daily 2018
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Intermediate wave (2) would most likely subdivide as a zigzag and at this stage that is how it will be labelled. However, it may also subdivide as a flat or combination. It is impossible at this stage to know which structure it will unfold as. The labelling within it will most likely change as it unfolds.

If intermediate wave (2) is unfolding as a zigzag, then within it minor wave A must subdivide as a five wave structure. Within minor wave A, minute waves i and ii may be complete. Minute wave iii has now moved above the end of minute wave i. When minute wave iv unfolds it must remain above minute wave i price territory at 47.00.

For the very short term, no invalidation points within intermediate wave (2) are given on this chart because it is not possible to know which structure may be unfolding. Flexibility is essential when corrections unfold.

Intermediate wave (2) may be very deep. It should last at least four weeks, so that it shows up on the monthly chart.

Intermediate wave (2) may not move beyond the start of intermediate wave (1) above 76.90.



US Oil Chart Monthly 2018
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Lower volume and a slightly bullish long lower wick for December add a little support to the Elliott wave count.


US Oil Chart Weekly 2017
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The Morning Doji Star is a bullish reversal pattern. With support from volume for the upwards week, this adds confidence that a low may be in place at least for the short to mid term.


US Oil Chart Daily 2017
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This chart overall supports the Elliott wave count.

Published @ 07:39 p.m. EST.

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