During the past month(s), I've posted ideas about crude oil that have all called for some type of ending wave pattern that would flow into a down trend resulting in $25 oil or lower. The actions of price in the past several weeks caused me to revisit that plan and in doing so, have changed how i look at price and indicators. Additionally, it's forced me to eradicate all Elliott Wave and Fibonacci and other type tools from my view. I found that these just led me to telling the market what to do instead of listening to what the market was telling me.
With this, I revisited my interpretation of monthly, weekly, daily (23H), and 4H charts on crude. I no longer believe that crude will make new lows but is now setting itself to test highs. I will not try to predict targets but instead look at areas of support and resistance as they evolve in the respective time periods.
For now, I'm looking at a point where I can go long crude. Starting with the 4H chart, the ADX has slipped below 20 indicating price consolidation. I think that this consolidation will setup the next bit move up as it did beginning August 26th. This would provide alittle more pullback on daily chart but would set up nicely my bullish interpretation of the weekly and monthly charts.
I think that weekly crude will not look back or see lower 40's anytime in foreseeable future and here's why. In referencing jul 2015 (A), the market was in a major bear market, the TSI, RSI, and ADX were at extremely oversold conditions and the push past 52.2x move these indicators back to overbought for a bear mearket (TSI moved up to 0, RSI moved up to 60 (bear market RSI shift to 60-20 range) and the +DMI did not takeout the high of the -DMI during this push. Additionally, the 50P weighted moving average was down. As the market continued down, TSI and RSI begain to diverge and the ADX began to make lower highs as price made lower lows (divergence). In reference next point (B), the market started to drive off of the low put in place and now, theh 50P WMA has proved some support and has started to turn up. The TSI moved up and has pulled back to 0 during the correction. The RSI pushed up to 75 so now it's rolled over to a bull trend and that implies that 40 will be the new oversold (80-40 in bull trend). Bottom line: 2016 looks like 2007 as far as the indicators go. Q: Will price repeat its action over the next 2 years
Monthly chart does provide a different view of weekly. But, as I'm looking at it, weekly price and indicators are a leading micro view of what monthly will track to. Looking at the TSI and RSI as to where they are now on monthly, I could see these pushing up to 30 on TSI and over 60 for RSI on this leg up. Even though the -DMI is above the +DMI on monthly, a move up to pull TSI and RSI up as noted above could keep the ADX well above 20 and set something up called a change in dominance where a 'V' pattern bottom causes the DMI's to swap or change dominance without any type of consolidating bottom in price. 60 may be a good place for initial resistance but I think the pullback on monthly will look more like the weekly price/indicator action between June 2016 and now.