Elliott Wave Analysis: How Much Further Can Oil Drop?

Hello Traders,

Short term Elliott Wave view on Oil suggests that the decline starting from Oct 3 high ($76.9) remains in progress as a 5 waves impulse Elliott Wave structure. Down from Oct 3 high, black wave ((1)) ended at $68.47 and black wave ((2)) ended at $69.66. Black wave ((3)) ended at $54.75 and black wave ((4)) is proposed complete at $57.37.

Consistent with the guidelines in Impulse Elliott Wave structure, Black wave ((3)) also unfolded as 5 waves of lesser degree. Down from $69.66, Blue wave (1) of ((3)) ended at $65.74 and blue wave (2) of ((3)) ended at $67.95. Blue wave (3) of ((3)) ended at $59.26, Blue wave (4) of ((3)) ended at $61.28. The final leg wave (5) of ((3)) ended at $54.75.

Black wave ((4)) ended at $57.37 as a double three Elliott Wave structure. Wave (W) of ((4)) ended at $56.49, wave (X) of ((4)) ended at $55.53, and wave (Y) of ((4)) ended at $57.37. Near term, while rally fails below $57.37, and more importantly below $61.35, we expect Oil to extend lower. If Oil breaks above $57.37, then Oil is doing a double correction and can open more upside in 7 swing before the decline resumes. For the downside target, one way to measure wave 5 target in Elliott Wave Theory is wave 1 equal to wave 5. If we project wave ((1)) length to the beginning of wave ((4)), we can estimate potential target for wave ((5)) at $47 – $49. We don’t like buying Oil.