The upwards movement over the last week has remained below the invalidation point on the daily Elliott wave counts.
Summary: A bearish candlestick wick with strongly declining volume and divergence with volatility suggests a high in place here for Oil.
The target for the next wave down is at 15.38 or 13.00. This target is some months away.
New updates to this analysis are in bold.
MONTHLY ELLIOTT WAVE COUNT
Click chart to enlarge.
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 19 months. So far there is good proportion between primary waves 2 and 4.
Primary wave 4 may not move into primary wave 1 price territory above 74.96.
WEEKLY ELLIOTT WAVE COUNT
Click chart to enlarge.
This wave count now sees primary wave 4 now complete as a relatively shallow zigzag. Primary wave 2 lasted 22 months. If primary wave 4 is over at the last high, it would have lasted 19 months giving the wave count good proportions at the weekly and monthly chart levels.
Intermediate wave (A) will subdivide as a five wave impulse. Intermediate wave (B) fits as a running contracting triangle. Intermediate wave (C) has moved above the end of intermediate wave (A) at 51.67 avoiding a truncation. There is no Fibonacci ratio between intermediate waves (A) and (C).
Within primary wave 5, no second wave correction may move beyond its start above 52.86.
The target uses the most common Fibonacci ratio for a fifth wave, so it should have a reasonable probability.
DAILY ELLIOTT WAVE COUNT
Click chart to enlarge.
Intermediate wave (C) may be seen as a complete five wave structure.
A move at primary degree should begin with a five down on the daily chart. This may be complete if minute wave i ends at the low labelled and not at the last swing low.
Minute wave ii may be a very common expanded flat correction. One more slight high would see the structure complete.
Minute wave ii may not move beyond the start of minute wave i above 52.86.
ALTERNATE WEEKLY ELLIOTT WAVE COUNT
Click chart to enlarge.
This alternate wave count considers the possibility that primary wave 4 ended earlier.
Primary wave 5 may have begun with a leading expanding diagonal for intermediate wave (1). Intermediate wave (2) may be an expanded flat correction.
Intermediate wave (2) may not move beyond the start of intermediate wave (1) above 55.24.
ALTERNATE DAILY ELLIOTT WAVE COUNT
Click chart to enlarge.
Intermediate wave (2) fits so far as an expanded flat correction that may be again incomplete.
Minor wave C may be another expanding diagonal, this one ending. Within ending diagonals, all sub-waves must subdivide as zigzags and the fourth wave should overlap first wave price territory.
Minute wave v must be longer than minute wave iii within an expanding diagonal, so that the rule regarding wave lengths is met. This rule is met.
Minor wave C has moved above the end of minor wave A at 52.00 avoiding a truncation and a very rare running flat.
The ending diagonal for minor wave C may be incomplete. If this wave count is correct, then for the very short term some increase in upwards momentum may be seen as the middle of a low degree third wave moves higher.
TECHNICAL ANALYSIS
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
With a long upper wick and a strong decline in volume, it looks like upwards movement is over. On Balance Volume is at resistance and this may serve to halt the rise in price here. This supports the main Elliott wave count.
VOLATILITY INDEX
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price has made a new high for the last session above the high two sessions ago, but volatility has increased where it would normally decline. This divergence indicates weakness within price and is bearish. It supports the idea that a high is now in place for Oil.
Published @ 09:46 p.m. EST.
Lara, is it too soon to consider a triangle for Primary 4? This could drag out a long time…
Lara, I think it’s looking like more like the alternate count is what is playing out. Price action today suggests that Minuette (b) may not be over, and that Subminuette i-iii on the alternate count was actually an X in a WXY for Minuette (b).
Lara, in your last analysis for USOIL the main count had an incomplete subminuette iv expecting a new slight new high (subminuette v) before a down turn. This week as subminuette iv developed, it moved down into the price range of subminuette i. As the wave structure for Minute C does not appear to be an ending diagonal, it seems that the last high (10/16) was in fact micro i and the last low (10/19) was micro ii of subminuette iii. Does this interpretation seem reasonable?