So if the market had indeed topped, where should we be looking for that correction to take us. A natural pullback of the rally coming out of the June lows suggests three significant short term technical targets.
1. Our '1st stop' 38.2% Fibonacci level
2. Our 2nd target 'the 50% rule'
3. Our Ultimate target a 70.5% retrace into the 'OTE Long Sweet Spot'.
After gaping lower, price spent a good portion of the past week flirting with the underside of our '1st stop' target (37.39). This repeated rejection (the last one came on a touch of the 13ema) suggest the 37.39 area may now be significant resistance. Interestingly, it also sets up a new shorter time frame 'BoT' short opportunity (please refer to 15m analysis for information on that). Since the 200sma and the significant low of August (36.35) sit right at our 2nd target, 'the 50% rule', I am fairly comfortable with the idea price will visit this area in the not too distant future.
Ultimately, I expect the oil market to work its way down into the OTE long sweet spot neighborhood (34.92) before it can start its bottoming process ('buy when it snows, sell when it goes'...and all that). That area also corresponds with that shorter time frame 'BoT' short setup target too. How exactly we get there is of course anyone's guess but the setups and targets are in place.