Building upon my earlier post that Crude Oil is setting up for a corrective rally I will do a scenario planning for better trading.
I had to adjust the count made earlier
to satisfy Elliott Wave rules. Namely what I identified is abc (circled) must be wxy because the count so far is 3-3- and it is not going to be a flat or expanded flat (only flats with 3-3-3 count make abc). Therefore I conclude it is wxy or more complex structure where y can be almost anything.
To prepare for that I illustrated 3 scenarios where y can be a zigzag, a flat or a triangle.
ZIGZAG (blue on the chart) If first wave sports 5 sub-waves we are in zigzag hence the best strategy could be - holding on to profits until 64.5 as the price action is likely to be swift and wave B can come almost unnoticed. ZIGZAG could also be a wave a (green) of flat abc structure. The trading strategy is the same - sell at 64.5, consider opening shorts. In the case of slower, choppier price action - we are most likely in a triangle formation (red abcde). This one will be more difficult and wearing to trade. Most likely will not result in any profits if I try jumping in an out but may provide more clarity for taking short positions when it is completed.