Oil looking for support: Elliott Wave

Markets are very slow since yesterday’s U.S. session when metals and energies fell sharply while U.S. stocks futures and EUR/USD (FOREX:EURUSD) did not move much. Generally speaking, we still think that the USD will extend its gains in the days ahead, while stocks will continue to the upside.

OIL 4h

Oil (NYMEX:CLZ13) is at the lows, so obviously the corrective bounce has unfolded sooner that we thought. Now when we are looking at the whole wave structure from the past 30 days, we see prices moving down in wave 5 that could be targeting the $90-$91 region in the next few sessions. Once this zone is met, be aware of a corrective bounce. As per Elliott Wave theory, when there is a 5-wave move we may expect at least a 3-wave correction.

OIL Intraday

Yesterday, I was also talking about crude oil when I was tracking an incomplete corrective rally. Well, this rally has finished much earlier than I thought, and it was because of wave (c), which had a failure formation as price did not pass the wave (a) high. Anyway, to us the important should be only the current price action and not the past one. With that said, we are focused on impulsive development from end of wave 4 with current pause seen in smaller blue wave (iv) that is part of incomplete weakness. As such, traders should be aware of a new sell-off down to $92.00-$92.30. Any intraday shorts should have stops placed above $94.30.

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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