Oil bounce just correction in downtrend: Elliott Wave

OIL 4h

Crude oil is trading lower, and based on the latest decline through the $100 mark and down to $96.00, we suspect that larger picture on this market is changing. For now we will focus on the current structure, which is showing a completed wave B around $103.00 level followed by recent push lower with accelerating price action through $100 mark, which we think it was a wave (iii). Decline should then be made by five waves down. As such, we think that the bounce from the low is just another correction within a downtrend. We are talking about wave (iv) that is pointing lower for wave (v), toward the $95-$94 zone.

COPPER 4h

We do not look at copper very often, but I see a triangle on the 4h chart, maybe already finished because of recent rally back to $3.318. However, we prefer a $3.3500 breakout on a daily close basis to confirm end of a triangle and further bullish waves up to $3.450, maybe even to $3.500.

Elliott Wave Education: Triangle Pattern

A Triangle is a common 5-wave pattern labeled A-B-C-D-E that moves counter-trend and is corrective in nature. Triangles move within two channel lines drawn from waves A to C, and from waves B to D. A Triangle is either contracting or expanding depending on whether the channel lines are converging or expanding. Triangles are overlapping five wave affairs that subdivide 3-3-3-3-3.

Contracting Triangle

  • Structure is 3-3-3-3-3
  • Each subwave of a triangle is usually a zig-zag
  • Wave E must end in the price territory of wave A
  • One subwave of a triangle usually has a much more complex structure than others subwaves
  • Appears in wave four in an impulse, wave B in an A-B-C, wave X or wave Y in a double threes, wave X or wave Z in a triple threes
About the Author

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and TheLFB.com. He also is founder of forex services on www.ew-forecast.com. EW-Forecast.com provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website: http://www.ew-forecast.com/

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