An upwards week sees price remain below the invalidation point. Volume analysis is relied upon heavily this week to indicate the direction for next week.
Summary: The next wave down may now begin. The final target is now calculated at 10.72.
Further confidence that a high is in place may be had if price makes a new low below 58.20.
MAIN ELLIOTT WAVE COUNT
MONTHLY CHART
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The basic Elliott wave structure is five steps forward and three steps back. This Elliott wave count expects that US Oil is still within a three steps back pattern, which began in July 2008. The Elliott wave count expects that the bear market for US Oil continues.
This Elliott wave corrective structure is a double zigzag, which is a fairly common structure. The correction is labelled Super Cycle wave (II).
The first zigzag in the double is complete and labelled cycle wave y. The double is joined by a three in the opposite direction labelled cycle wave x, which subdivides as a zigzag. The second zigzag in the double may now have begun, labelled cycle wave w.
The purpose of a second zigzag in a double zigzag is to deepen the correction when the first zigzag does not move price deep enough. To achieve this purpose cycle wave y may be expected to move reasonably below the end of cycle wave w at 26.06. The target calculated would see this expectation met.
Cycle wave y is expected to subdivide as a zigzag, which subdivides 5-3-5.
Cycle wave w lasted 7.6 years and cycle wave x lasted 2.7 years. Cycle wave y may be expected to last possibly about a Fibonacci 5 or 8 years.
If it continues higher, then primary wave B may not move beyond the start of primary wave A above 76.90.
WEEKLY CHART
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This weekly chart is 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.
Primary wave A may be a complete five wave impulse at the last low.
Primary wave B may now be a complete single zigzag at the last high.
Primary wave C may have just begun. Primary wave C must subdivide as a five wave structure.
Primary wave A lasted 12 weeks, just one short of a Fibonacci 13.
Primary wave C may be longer in time as well as price. It may last about a Fibonacci 21 or 34 weeks.
Within primary wave C, no second wave correction may move beyond its start above 66.59.
DAILY CHART
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Primary wave B is now labelled as a complete single zigzag.
Note that monthly and weekly charts are on a semi-log scale, but this daily chart is on an arithmetic scale. This makes a slight difference to trend channels. Use this channel on a daily chart on an arithmetic scale.
The channel is drawn conservatively to contain all of the bounce of primary wave B. There is now a very clear breach of this channel. This adds confidence now to the labelling of primary wave B as complete.
Primary wave C must subdivide as a five wave structure, most likely an impulse. Within the impulse, minor waves 1 and now 2 may be complete. A target is calculated for minor wave 3 that expects a common Fibonacci ratio to minor wave 1. If the target is wrong, it may not be low enough.
If it continues higher, then minor wave 2 may not move beyond the start of minor wave 1 above 66.59.
Primary wave C may be extended in time; the subdivisions of intermediate waves (2) and (4) may show up at the weekly time frame.
TECHNICAL ANALYSIS
MONTHLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Volume and On Balance Volume are bullish. This suggests the bounce may not be over, and this does not support the Elliott wave count.
The long upper wick on April’s monthly candlestick is bearish. This bearish signal is weaker than the bullish volume profile.
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A Shooting Star candlestick pattern is a bearish reversal pattern when it comes at the end of an upwards movement.
The short-term volume profile is now bearish.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Since the 24th of December 2018 there has been a series of higher highs and higher lows, the basic definition of an upwards trend. Assume this will continue until proven it has ended. A lower low below the low of the 28th of March 2019 at 58.20 would provide evidence the bounce is over.
The short-term volume profile remains fairly strongly bearish and supports the Elliott wave count.
On Balance Volume is right at resistance; it has not clearly broken above the yellow resistance line. If On Balance Volume turns lower from here, that may be taken as a bearish signal.
Published @ 11:00 p.m. EST.
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New updates to this analysis are in bold.