Elliott Wave Patterns Suggest Crude Oil Could Reverse Up From 101-103 Support Zone

By: Gregor Horvat | Thu, Sep 26, 2013
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Few weeks back oil reversed sharply from the 112 high when a five wave rally from 91.00 area completed a larger degree of an extended wave 3). As such, the contra-trend reaction is called a corrective retracement that is now unfolding but maybe near completion. We are tracking red wave 4) that may look for a support around 50% Fibonacci retracement level compared to wave 3); that's one of the most important Fibonacci levels when you are looking a reversal point. It's also important to know that 92 figure represents invalidation level of our bullish forecast, because wave 4) must not fall into the region of a wave 1).

OIL Daily

Oil Daily Elliott Wave Chart

On the 4h chart below we can see that Oil extended its weakness after recent sell-off from 108 zone at the end of the last week. Current bearish leg will delay an upward bullish structure but it does not change the larger picture which suggests that move from the top is corrective; an A-B-C retracement in wave 4) that could look for a completion in 101-103 zone, at wave C - wave A equality level. This has already been tested so bounce in price could be near.

If you are one of the patient traders then you will wait on the bottom to form first, before you may start to consider long entries. So from a confirmation and trading point of view it would be nice to see an impulsive upward reaction back to 106 level to confirm a change in trend; from a bearish corrective retracement up to bullish continuation.

Elliott wave traders will know that impulse is a five wave pattern that occurs in the direction of a larger trend, so only this type of a rally can put bullish waves back in control. In such case traders could be interested in long opportunities.

OIL 4h

Oil 4-Hour Elliott Wave Chart

 


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Gregor Horvat

Author: Gregor Horvat

Gregor Horvat
www.ew-forecast.com

Gregor Horvat

Grega is based in Slovenia and has been involved in markets since 2003. He is the owner of www.ew-forecast.com, but before that he was working for Capital Forex Group and TheLFB.com. His feature articles have been published on: SafeHaven.com, FXstreet.com, Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu, Insidefutures.com, etc. He recently won the award on FXStreet.com for Best Forex Analysis in 2016. At www.ew-forecast.com he helps clients and educate them about the Elliott wave prinicple and how to label and track unfolding patterns in real time.  His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets such as candlestick patterns, MA, technical indicators etc. His specialty however is Elliott Wave Theory which could be very helpful especially if you know how to use it in combination with other tools/indicators.

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