USOil had been in a MASSIVE decline and went as low as $26.00. But fro there, it has made a slow recovery and this recovery may stick around for awhile. But will it go higher? Or will it again head down to test out those lows? With the way the political world, the natural world and the economic world are in such turmoil, it is not easy to forecast the future. But let's turn to the charts and see what they say.
Here you can see that MASSIVE drop from its highs only 2 years ago at $112 all the way down to $26.00. Although the fundamental world was surprised, the chart had already been giving out strong signals that there was to be a decline in prices. but I don't think anybody foresaw the strength of the down fall of oil prices. But now it has probably reached at least a temporary bottom if not a lasting one. Prices put in a MAJOR reversal signal in the form of a morningstar candle pattern with a long-legged . That is one it strongest reversal pattern there is. And prices have started reacting to it already by heading higher.
Overall, I see a completed ABC corrective pattern in place. That means that the next move should be another impulsive wave up. I won't get into speculating as to how high prices can get again and will they get even higher than the previous highs. There are just too many unknowables to be able to foresee anything like that. For now, it's only useful to try to predict how high will prices go in the near future.
In this Weekly chart of USOil , you can see how that big drop broke down in 5-waves which was expected since it was a wave (C). At the bottom, you can see a nice clear that occurred right at a MAJOR (W) SR structure. These are the only kinds of pinbars that deserve any kind of attention.
Here's how I am seeing the current move higher as breaking down in USOil . So far, we've seen a wave (1) and a wave (2). The current move up should be the wave (3). If the wave count is correct, then eventually whenever the impulse wave is done, we may see prices up around the $70 - $80 marks. Or maybe even higher. For now, I see this wave (3) as probably reaching to $50. Notice also that there was also another morningstar w/long-legged in this . This is NOT the same one as seen in the Monthly chart above.
Looking at how this possible wave (3) is breaking down, there seems to be a clear 5-wave pattern unfolding here with the wave i, ii and iii already done. The wave iv is looking like it is to be a that is still unfolding. When done, we should see another wave up in a wave v of (3) that should see prices going to $50. That consolidation is confirming that the wave count is correct as flags, and triangles usually occur in the wave 4 positions.
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