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Last week’s analysis of oil expected price to drop which is what has happened so far.

The wave count remains the same. To see the big picture on monthly charts click here.

This week’s analysis of oil will continue with a daily chart and a two hourly chart.

Click on the charts below to enlarge.

US Oil daily 2013

Price has moved lower and is showing an increase in downwards momentum which is exactly what should be expected for a third wave. At this stage wave 3 blue cannot be complete and so a continuation of overall downwards movement for this week should be expected.

It is extremely likely that minor wave 2 is complete. A clear five down on the hourly or two hourly chart would add confidence. At this stage it could be argued that the two hourly chart shows a three down not a five. For that reason I will allow for the possible continuation further sideways of minor wave 2. Wave 2 may not move beyond the start of wave 1. This wave count is invalidated with movement above 100.43.

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 hourly 2013

Within minor wave 3 minute wave i is most likely incomplete.

Within minute wave i minuette waves (i) and (ii) are likely complete and minuette wave (iii) is incomplete.

Ratios within minuette wave (i) are: subminuette wave iii is just 0.08 short of 2.618 the length of subminuette wave i, and subminuette wave v has no Fibonacci ratio to either of subminuette waves i or iii. Within subminuette wave ii micro wave C has no Fibonacci ratio to micro wave A.

Within minuette wave (ii) there is no Fibonacci ratio between subminuette waves a and c. Within subminuette wave a micro wave C is 0.04 longer than 0.382 the length if micro wave A. Within subminuette wave b micro wave C is 0.06 short of equality with micro wave A. Within subminuette wave c there are no Fibonacci ratios between micro waves 1, 3 and 5.

Ratios within subminuette wave i within minute wave (iii) are: micro wave 3 is 0.09 longer than 1.618 the length of micro wave 1, and micro wave 5 has no Fibonacci ratio to micro waves 1 or 3.

Within subminuette wave ii within minute wave (iii) there is no Fibonacci ratio between micro waves A and C.

Within subminuette wave iii within minute wave (iii) micro wave 3 has no Fibonacci ratio to micro wave 1. Micro wave 3 is shorter than micro wave 1 which gives a limit to micro wave 5 at 90.63. This target is also a downwards limit for micro wave 5.

When micro wave 5 completes subminuette wave iii the following subminuette wave iv may not move into subminuette wave i price territory. This wave count is invalidated at that stage with movement above 95.21.

At 89.70 minute wave (iii) would reach 2.618 the length of minute wave (i).