Oil: Running out of fumes?
Oil Sell Position
Oil Sell Position
Oil has moved impulsively for many months now, and this last leg up is - or is close to becoming - a completed 5 wave structure. After which, there will be a correction. It's possible to build a case for the top being in using some common Fibonacci relationships; even a glance at the recent deep retracements in the above image shows that the bears are starting to fight back.
Here's a closeup of the A leg down, as we take a look at the expanded flat piece by piece. The C is extreme, reaching a 261.8% extension, the substructure supports this extreme with orange wave 3 reaching a 261.8% extension too. Note that at the bottom of the image, the white line is the 38.2% retracement of wave 2 to wave 5 and is the likely catalyst for our B wave.
When taken as a retracement from intermediate wave 2 to the high point, this invokes the counter-argument that our count is incomplete and that A is actually intermediate wave 4... but I find the ratios labelled in the first image too convincing.
The Fibonacci extensions in the A wave make for a convincing 5 wave structure, even with the very deep 2. And now we see one of the arguments for the top being in, given that C meets the 161.8% extension of A. If the substructure of C proves to be technical then the argument for a top becomes more convincing.
The final image shows a great 5 wave substructure for orange wave 1, and that wave 5 is a 61.8% extension of the origin to wave 3 - a common target for wave 5. Unfortunately, there isn't a technical pivot for wave 3 ends, which leaves something to be desired of this count... and the -23.6% it still sitting a few $ above our current price level.
Even without reaching the -0.236, the risk to reward on this trade is great!
Disclaimer: I'm not a financial advisor, this is only my opinion.