US Oil Elliott Wave Technical Analysis – 5th March, 2013

Last week’s analysis of oil expected further downwards movement for the week. The lower target for the week was 89.70. The invalidation point on the 2 hourly chart was at 95.21.

Price did move lower to reach 0.35 below the target and the low for the week was 89.35.

Click on the charts below to enlarge.

US Oil Elliott Wave Chart 2013

This wave count sees US Oil in a third wave downwards at intermediate degree, within a primary wave C down.

Within intermediate wave (3) minor waves 1 and 2 are complete.

Within minor wave 3 minute wave i may now be complete. Minute wave ii may not move beyond the start of minute wave i. This wave count is invalidated with movement above 98.24.

At this stage I would expect minute wave ii to most likely be a deep zigzag correction ending about the 0.618 Fibonacci ratio of minute wave i about 94.84.

We may use Elliott’s channeling technique to draw a channel about minute wave i. Draw the first trend line from the lows of minuette waves (i) to (iii), then place a parallel copy upon the high of minuette wave (ii). Minuette wave (v) shows a typical spike below the channel, typical for commodities. When this channel is breached by upwards movement then we shall have some confirmation that minute wave i is over and minute wave ii is underway.

Minor wave 3 must make a new low below the end of minor wave 1 at 84.07.

At 71.33 minor wave 3 would reach 1.618 the length of minor wave 1.

US Oil Elliott Wave Chart 2013

Ratios within minute wave i are: minuette wave (iii) has no Fibonacci ratio to minuette wave (i), and minuette wave (v) is just 0.10 longer than 0.618 the length of minuette wave (iii). Minuette wave (ii) was a deep flat correction and minuette wave (iv) was a shallow triangle, showing perfect alternation.

At this early stage it is impossible to tell which structure will unfold for minute wave ii. It is only possible to say it is most likely to be a simple zigzag. If it is a flat correction then minuette wave (b) within it may make a new low, so there can be no downwards invalidation point.

I will be expecting choppy overlapping upwards movement for this next week to about 94.84. If minute wave ii is a single zigzag it may be over in about 5 days. If it is a longer lasting flat, double or combination it may take longer.