This morning, a triangle came to light that unlocked some wave relationships that are causing me to change my tune on Oil . (For those who attended the US Opening Bell webinar this morning, I was Oil . In light of seeing this triangle below, I am changing my tune to .)
When I changed the time frame of chart, the triangle in late April was exposed. When drawing the 2-4 trend channel based on blue ‘iv’ triangle in late April, it created an incredibly clean trend channel (red channel). These trend channels are useful for determining ending points for the fifth waves, in this case blue ‘v’.
This is important for a couple of reasons. First, notice how prices couldn’t penetrate the mid-line on May 6 (the dotted red line). This is quite . The opposing end of the trend channel is the typical stopping point, yet in this case it couldn’t get half way there!
Secondly, this upward push could be the end of circle ‘iv’. Fourth waves typically retrace about 38% of its third wave. In this case, the 38% retracement level was at 63.50 and prices came very close to this level.
Therefore, with a very ending wave to the upward push that exhausted near an important fib level, we elevate the counts in the green notes. Both counts in the green box call for a move below 45.
If you like, give a thumbs up and follow. Feel free to share your EW counts on Oil as well.
Where does the count become invalidated?
The count shown on the chart is scenario #1. In the notes of scenario #1 (green note box) you’ll see that the May 8 low of 58.11 should not be broken for it to remain valid. I admit, I could have instilled more clarity on that comment in the chart.
Where do you put a stop out on a short position on the way up? Since 58.11 is the invalidation point, 1 pt. above there 58.12.
How do you have a tiny (ii) and giant wave (iv)?
This is certainly the most concerning about the #1 scenario, but the near term implications are still the same. The wave down from July 2014 is an extended 3rd wave. I’m still showing this 4th wave is still a part of the extended 3rd wave. We could slide waves 1-2 to the left and have them cover Sept 2013 (1) to June 2014 (2). (see image below)
Regardless of whether waves 1-2 are placed in Sept 2014 or Sept ’13-June ‘14, the down trend still counts as incomplete. That makes the near term implications for a sell-off under scenario #1 or #2 still the elevated possibility in the green notes.
Tim, thanks again for the questions. Best of luck in your trading!
So, I also have my eye on USDCAD right now...it is at a confluence of wave relationships. If USDCAD breaks higher above 1.2800 it would be significant enough to clear for the next levels higher, that may accelerate Oil lower through your channels.
I'll have a USDCAD chart posted later on with analysis...stay tuned.
Canadian's purchase oil at the retail pump mostly based on Brent. Producers sell oil more heavily weighted on WTI (and West Canada Select). Therefore, if WTI cannot keep up with Brent, CAD likely suffers. On the flip side, if WTI outpaces Brent, CAD may outperform.
Here's a recent chart of that comparison. Some food for thought.
You are right, I made recount and checked with EW website, they count different with both you and me here is the link http://www.elliottwave.com/images/freeupdates/image/mw%252007-05-2015oil.png
I am not following USDCAD at all, can't share the count though but you are right I should as it can give some clear clues, thanks for this hint.
You comparative chart of oil vs cad convinced me to follow the fx cross either.