Cracking the Case of Crude Oil using Elliot Wave Principles
Hello Everyone,
After a long period of Consolidation in a Symmetrical Triangle, The Crude finally broke out to the downside and did a major drop. So big that it worried a lot of countries feeding on the black gold.
Nowadays it feels like people are no longer fan on commodities. They'd prefer more of the greenbacks than golden back-and-fronts. As you see currently, gold has also had a big decline (also after breaking out of a major Symmetrical Triangle).
Now let's talk business,
I wanted to analyze where the Brent is going to go in the following days, and there was no other way than going back as far as I could to see where it all started and how it came down to this.
I know I'm using a big timeframe for my analysis and I know most of you are day traders looking for fast rewarding setups and also for crude oil since we're trading futures there's a monthly time limit on the duration of the trades we hold.
So there no meaning to a trade idea that needs 3 months to develop when it comes down to Crude.
But I believe the time for the Crude right now is so critical right now, it's like an atomic bomb right before it goes off.
As you can see from the chart, we've been sitting in a correction phase since late Feb 2012.
After the devastating crash in July 2008 that ended in Dec 2008, Crude has been a lot more subtle in its movements.
Even the Wave I which is a motive wave has less momentum than the Wave (II) which is a corrective wave.
Crude Started its Super-cycle trend upwards in 1999 and went up for 9 years until it crashed in 2008.
Now, a lot of people think it has shifted its direction to the downwards and started a new trend which is bearish. But I'm afraid this couldn't be the case.
Since Crude Oil is a commodity, and even not a renewable one, so it doesn't make sense that it's going down in a trend while its production is getting harder and harder each day.
I know, the crash was fast and deep. That's the case for almost any 2nd wave correction these days.
The crash is done right now and there's no worry for any crazy declines.
Now let's lower our scope 1 degree,
In the Cycle degree, Wave I completed a slow and steady move 128$ per barrel.
As I marked the Primary waves within the Cycle the Wave ((5)) was a double top, faking out on top of the ((3)) Wave.
After Wave I completed its move, the market got ready for a long, complex correction that we've been through in the past 2 years and it's about to finish really soon.
The Complex Correction:
The Complex Correction was made up of a sharp ZigZag named A, a Symmetrical Triangle named B and another sharp decline named C.
I have made an area of ratio confluences using different powerful methods (Extension, Vector, Displacement,...) to pinpoint the termination price of wave C.
This tells me Brent will NOT go lower than 70$ per barrel.
Any price action that confirms a reversal is going to point to the new uptrend which is Wave III (blue square).
As we all know from Elliott Wave guidelines the 3rd wave of the 3rd wave is has a high chance of being fast and strong and probably extended.
So get ready for the headline that read "Brent sells at 70 something per Barrel", as it is going to a big reversal point.
When this occurs, we will get ready to see all time new highs for Crude Oil. Not surprisingly, 150$ per Barrel as the 1.272 Extension of Wave I suggests.
If you have any questions or ideas, please comment below.
I would be more than happy to answer.
After a long period of Consolidation in a Symmetrical Triangle, The Crude finally broke out to the downside and did a major drop. So big that it worried a lot of countries feeding on the black gold.
Nowadays it feels like people are no longer fan on commodities. They'd prefer more of the greenbacks than golden back-and-fronts. As you see currently, gold has also had a big decline (also after breaking out of a major Symmetrical Triangle).
Now let's talk business,
I wanted to analyze where the Brent is going to go in the following days, and there was no other way than going back as far as I could to see where it all started and how it came down to this.
I know I'm using a big timeframe for my analysis and I know most of you are day traders looking for fast rewarding setups and also for crude oil since we're trading futures there's a monthly time limit on the duration of the trades we hold.
So there no meaning to a trade idea that needs 3 months to develop when it comes down to Crude.
But I believe the time for the Crude right now is so critical right now, it's like an atomic bomb right before it goes off.
As you can see from the chart, we've been sitting in a correction phase since late Feb 2012.
After the devastating crash in July 2008 that ended in Dec 2008, Crude has been a lot more subtle in its movements.
Even the Wave I which is a motive wave has less momentum than the Wave (II) which is a corrective wave.
Crude Started its Super-cycle trend upwards in 1999 and went up for 9 years until it crashed in 2008.
Now, a lot of people think it has shifted its direction to the downwards and started a new trend which is bearish. But I'm afraid this couldn't be the case.
Since Crude Oil is a commodity, and even not a renewable one, so it doesn't make sense that it's going down in a trend while its production is getting harder and harder each day.
I know, the crash was fast and deep. That's the case for almost any 2nd wave correction these days.
The crash is done right now and there's no worry for any crazy declines.
Now let's lower our scope 1 degree,
In the Cycle degree, Wave I completed a slow and steady move 128$ per barrel.
As I marked the Primary waves within the Cycle the Wave ((5)) was a double top, faking out on top of the ((3)) Wave.
After Wave I completed its move, the market got ready for a long, complex correction that we've been through in the past 2 years and it's about to finish really soon.
The Complex Correction:
The Complex Correction was made up of a sharp ZigZag named A, a Symmetrical Triangle named B and another sharp decline named C.
I have made an area of ratio confluences using different powerful methods (Extension, Vector, Displacement,...) to pinpoint the termination price of wave C.
This tells me Brent will NOT go lower than 70$ per barrel.
Any price action that confirms a reversal is going to point to the new uptrend which is Wave III (blue square).
As we all know from Elliott Wave guidelines the 3rd wave of the 3rd wave is has a high chance of being fast and strong and probably extended.
So get ready for the headline that read "Brent sells at 70 something per Barrel", as it is going to a big reversal point.
When this occurs, we will get ready to see all time new highs for Crude Oil. Not surprisingly, 150$ per Barrel as the 1.272 Extension of Wave I suggests.
If you have any questions or ideas, please comment below.
I would be more than happy to answer.