Upwards movement continues.

A new daily Elliott wave count is used this week.

Summary: A target for upwards movement to end is now at 68.49. The next pullback or consolidation may last several weeks.

A breach of the best fit channel would add substantial confidence in a trend change and the start of a multi-week pullback or consolidation.

The larger trend remains up.

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

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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 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. At the end of this week, price is now at the upper edge of this channel.

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 nearing completion, and primary wave 2 may not move beyond the start of primary wave 1 below 33.65.

Primary wave 1 is relabelled this week after further upwards movement. Upwards movement of the last three sessions looks like a typically strong fifth wave; this may be intermediate wave (5).

The best fit channel is adjusted to contain almost all of primary wave 1. A breach of this channel by downwards movement would provide substantial confidence that primary wave 1 should be over and primary wave 2 should have arrived.

Primary wave 2 may be a multi-week pullback or consolidation.

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 remains 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. A bullish signal from On Balance Volume and a strong end to upwards movement this week suggest the upwards trend may continue further.

DAILY CHART

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

At the daily chart level, this upwards trend is now very extreme and RSI is overbought and now exhibits double bearish divergence. This trend is highly vulnerable to a reversal at this stage. However, a bullish signal from On Balance Volume suggests it may continue a little further.

Published @ 06:12 p.m. ET.

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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.