Price remained within the channel on the daily chart and continued lower this week exactly as expected.

Summary: Assume the downwards trend remains while price remains within the channel on the daily chart. There are now two final targets. The first is at 12.82. If price reaches this first target and the structure is incomplete, or if price keeps falling through this first target, then the second target is at 9.77.

A new high now above the upper edge of the black channel the daily charts would suggest it could be possible a sustainable low may be in place. This view would require a new high above 49.32 for confidence.

MAIN ELLIOTT WAVE COUNT – BEARISH

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 w. 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 is almost complete, labelled cycle wave y.

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. This purpose has now been achieved. The next thing to look for is a complete structure within primary wave C.

Primary wave C has passed equality in length with primary wave A at 31.11. The next Fibonacci ratio of 1.618 is used to calculate a target for primary wave C and cycle wave y to end.

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 now looks like it may be over within a few more weeks.

Within primary wave C, no second wave correction may move beyond the start of its first wave above 65.64.

A channel is drawn about Super Cycle wave (II): draw the first trend line from the start of cycle wave w to the end of cycle wave x, then place a parallel copy on the end of cycle wave w. Price has bounced up off the channel. The target expects this trend line to be breached.

WEEKLY CHART

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This weekly chart shows all of cycle wave y so far.

Cycle wave y is expected to subdivide as a zigzag. A zigzag subdivides 5-3-5.

Primary wave C must subdivide as a five wave motive structure, most likely an impulse. Within primary wave C, intermediate waves (1) through to (4) may now all be complete. Intermediate wave (5) may have begun.

If it continues any higher, then intermediate wave (4) may not move into intermediate wave (1) price territory above 49.32.

DAILY CHART

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Primary wave C must subdivide as a five wave motive structure, most likely an impulse. Within primary wave C, intermediate waves (1) through to (4) may now be complete.

Draw an Elliott channel about primary wave C: draw the first trend line from the end of intermediate wave (1) to the end of intermediate wave (3), then place a parallel copy on the end of intermediate wave (2). Intermediate wave (4) has found resistance at the upper edge of the channel.

A new target is calculated at intermediate degree. If price reaches the first target and either the structure is incomplete or price keeps falling, then the second target would be used.

If the Elliott channel is breached by upwards (not sideways) movement, then the alternate wave count below would increase in probability.

ALTERNATE DAILY CHART

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It is possible that the bear market may now be complete for Oil. Grand Super Cycle wave (II) may be complete at all degrees.

This wave count requires a new high above 49.32 for confidence.

TECHNICAL ANALYSIS

MONTHLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

When this market trends strongly down, it can reach extreme and yet price can continue for a reasonable distance.

A sustainable low may not yet be in place. Look for RSI to reach more deeply oversold and then to exhibit bullish divergence with price at swing lows.

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

Overall, expect the downwards trend to continue (but keep in mind price does not move in straight lines).

A strong Bullish Engulfing pattern with support from volume suggests a possible trend change. If the measuring gap is closed with a new high above 41.05, then that would indicate a trend change. An inside week this week does not change that view.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

For the short term, push from volume and a bearish long upper wick suggest more downwards movement immediately ahead.

Published @ 06:31 p.m. EST on March 28, 2020.

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New updates to this analysis are in bold.