Crude Oil Made A Sneaky B-wave High

A month ago, we posted this warning to crude oil bulls, showing how the year-long rally was overdue for a correction. Specifically we showed the 16.05 area as important resist for the United States Oil Fund (NYSE Arca: USO) in our public-facing post, and our subscribers knew about the 76.35-77.57 area as corresponding resistance for crude oil futures.

In the weeks since then, crude oil has melted down in a way that's remarkable even for that volatile commodity.

The swift decline acted as one would expect of a "C-wave" in an Elliott wave framework. It has also reached an area where a trader might watch for a bounce near Gann-related supports at 55.20 and 53.70.

It's possible that the correction is entirely complete. However we believe the stronger possibility is that the three-swing move since mid-2018 merely represents wave (a) in a more complex (a)-(b)-(c) correction. That view would allow for turns to coincide with the nearby inflection of the 42-week cycle and also with the next inflection in May 2019.

Traders might begin shopping for opportunities at long positions based on nearby support, but they should realize that the next upward phase may be somewhat choppy as would be expected of wave (b) in the pattern.

The first Gann-related resistance to overcome sits at 61.90, with other resistance levels at 65.70 and 69.40. Crude oil futures might climb through those areas in a forward-and-back fashion.

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