Upwards movement this week continued as the Elliott wave count expected, but the target at 55.40 was inadequate.

Summary: A new target for the upwards trend to end (for the mid term) is at 58.41.

A new low below 53.24 and a breach of the channel on the daily chart would indicate a trend change. At that stage, a multi-week pullback or consolidation may be expected.

A longer-term target for a third wave is at 87.90 or 121.43.

Oil may have found a major sustainable low in April 2020.

ELLIOTT WAVE COUNT

MONTHLY CHART

Click chart to enlarge.

The basic Elliott wave structure is five steps forward and three steps back. This Elliott wave count expects that US Oil has completed a three steps back pattern, which began in July 2008. The Elliott wave count expects that the bear market for US Oil may now be over.

Following Super Cycle wave (II), which was a correction (three steps back), Super Cycle wave (III), which may have begun, should be five steps up when complete. Super Cycle wave (III) may last a generation and must make a new high above the end of Super Cycle wave (I) at 146.73.

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. This trend line is breached, which is a typical look for the end of a movement for a commodity.

The upper edge of the channel may provide resistance. If resistance is breached, then the upper edge may provide support for a back test.

Super Cycle wave (III) may only subdivide as a five wave impulse. New trends for Oil usually start out very slowly with short first waves and deep time consuming second wave corrections. However, while this is a common tendency, it is not always seen and may not have been seen in this instance. The first reasonably sized pullback may be over already.

WEEKLY CHART

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Super Cycle wave (III) must subdivide as an impulse. Cycle wave I within the impulse may be complete. Cycle wave II may also now be complete, and cycle wave III upwards may now have begun. If cycle wave II continues lower, then it may not move beyond the start of cycle wave I below 10.24.

There is only one daily chart following this main weekly chart. An alternate is presented below on a weekly chart.

DAILY CHART

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Cycle wave III may only subdivide as an impulse. Within the impulse: Primary wave 1 may be incomplete, and primary wave 2 may not move beyond the start of primary wave 1 below 33.65.

Intermediate wave (5) within primary wave 1 may be nearing an end. Intermediate wave (5) may be subdividing as an impulse.

Within intermediate wave (5): Minute waves i and ii may be complete, and minute wave iii may be complete at this week’s high, or it may continue higher. Minute wave iv may not move into minute wave i price territory below 53.24.

Use the best fit channel as a guide to when primary wave 1 may be over. At least one full daily candlestick of downwards movement (not sideways) below and not touching the lower trend line would constitute a breach. A breach of this channel would indicate a trend change.

A new low below 53.24 (prior to the structure of intermediate wave (5) completing) may not be minute wave iv, so at that stage minor wave 5 and intermediate wave (5) and primary wave 1 may be complete. A new low below 53.24 would indicate a trend change.

When primary wave 1 is complete, then a multi-week pullback or consolidation for primary wave 2 should begin.

ALTERNATE WEEKLY CHART

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This alternate wave count moves the degree of labelling within the start of the bull market down one degree. It is possible that cycle wave I is incomplete.

The target for primary wave 3 is lower than the target on the first wave count.

A daily chart for this alternate would be the same as the daily chart for the main wave count, except the degree of labelling would be one degree lower. The channel would be the same.

TECHNICAL ANALYSIS

WEEKLY CHART

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

Price is within a cluster of resistance and support; this may slow it down.

RSI this week moves into overbought, but it may become more deeply overbought before a trend ends. ADX is still not extreme; there is room for this upwards trend to continue.

DAILY CHART

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

At the daily chart level, this upwards trend is again extreme and RSI is overbought. However, this market can sustain extreme conditions for some time while price travels a reasonable distance.

The Advance Block candlestick pattern is a variation of the Three White Soldiers. While Three White Soldiers is a bullish continuation pattern, Advance Block is bearish. The smaller real body of the second and third candlesticks suggests the rally is running into trouble and bulls should protect themselves.

Published @ 07:28 p.m. ET.

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Follow my two Golden Rules:

1. Always trade with stops.

2. Risk only 1-5% of equity on any one trade.

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New updates to this analysis are in bold.