Keep an eye on the breach of the upper blue trend line as it would indicate we are likely dealing with a more bearish scenario than outlined in the original idea.
For now trading plan is to sell on rallies and reduce position size, until a clearer signal is generated.
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So here we are. Almost at the completion of the impulse. Now a bigger correction looms. My trading plan now is to start building up short positions from $63 mark whilst bearing in mind that the correction could go slightly deeper at 38.2 and 50% levels. The trick is to start with small position size and build it up while the price moves against you. This of course requires an immense belief in your analysis that the price will ultimately go in your favour.
Happy Trading!
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So we have now successfully traded the correction up to $63.50. It is always tricky to trade the corrections but we had reasonable confidence that the price will move back up in wave (ii) Green - to at least the upper blue channel (at c$63.50).
However, the question is what now? The way I see it, there are two options and both pointing downward to a minimum target of $58.88. I prefer the second option as we can short from higher levels at just above $64.
So far the price has retraced just 38.2% of the first Green impulse. As such, it can definitely go down from here but I suspect it is likely to retrace slightly higher. Although it is not noted on the chart but we are also mindful that price can easily retrace to 61.8%. After all, the bigger the retrace, the harder the fall.
So here is my trading plan for the third Green impulse:
1. I will start building up short positions from current levels. The initial positions will be tiny though. More positions of medium size will be added at $64 level.
2. If price moves to 61.8% retrace, in that case, I will add heavy short positions. Personally, I prefer this scenario but we shall see.
3. Third step is to sit back and enjoy the ride to our first target of $58.88.
Happy Trading!
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Heads up .. on review you will find that OIL tends to retrace very deep for wave 2. As such, don't be alarmed if the price jumps to $65 or even slightly above that. The short side target remains valid as long as WTI doesn't make a new high.
Time to start building up short positions.
Happy Trading!
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What a great day it has been. We knew that Oil is likely to be able to do a very deep retrace for Wave 2. This is a very unique property rarely seen in other asset classes. For instance, the initial drop labelled as 1 2 in yellow scale, the second wave retraced 90+% of the first wave, and you will find various similar examples if you look back on the chart.
In any case, I am fairly certain that the only direction from here is down. This is on the basis of the fact that today's huge move up has almost non-existent support from Volume. Just look at the above image and see the volume graph against the price of previous few days. WTI is unlikely to be able to sustain prices at this level without sufficient support from Volume. Hence, the reason for my confidence that prices will come down crashing in the next few days in Wave 3 (Green).
This is my personal opinion based on my own analysis. Please do your own due diligence before taking any trade.
sir in your update seen completeing 5 wave impulse move and now 3 wave up correcting move up to limited 63 you predicted so my question Why small pull back is it your idea is that ii of 5th wave for extended 5th wave pl reply sir
WaqasRaja
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@royalbengal, I am not sure I completely understand exactly what you are asking but I have set out my idea below. This is just a prediction and bear in mind that wave ii (Green) could easily pull back to $63.50 - $64 level, before resuming for wave iii (Green). Hope it helps.