Crude Oil: Wave Technical Analysis Broken? – September 20, 2016
What is happening with the Brent market recently? Why are not we finally facing a bullish C wave or a 3rd impulse wave up on an 8-hour time frame that was outlooked by Mtradee.com in a number of reviews? In our usual way we need to start with older time frames.
A weekly chart shows us a definite 3-wave bearish structure plotted with grey lines and some adjacent bullish wave with an unclear status. We treated this recent recovery as a 4th correction recovery wave of a weekly time frame. Do we have enough reasons to state this? Here you are:
- Bearish support from a 4-week time frame. A 4-week time frame that is a bit smaller than a monthly one has its own Awesome Ocillator – AOx4. The basic line is coloured red and located deeply below the zero line. The basic line of AOx4 has touched the balance line but has not crossed it yet and is moving along – this pattern often leads to a bounce that will reconfirm continuation of the down trend.
- The basic line of the Awesome Oscillator AOx1 corresponding to the current weekly time frame of the chart has turned red – this is a partial bearish signal.
- The William’s Percent Range (WPR) indicator has touched its upper overbought zone being an indirect signal that the bullish wave is quite adequate and full and could be substituted by the opposite momentum wave. However, this is a controversial signal as the WPR may remain in its extreme zones for quite a long time in case of a wave’s extension or prolongation.
Will The Downtrend Continue?
There are 2 main options on a weekly chart:
- it is a new A wave up OR
- the current recovery is a 4th correction wave.
If the current growth is a new bullish A wave, it must get support from the older 4-week chart. However, we do not see any signs of it.
If we consider the current recovery to be just a 4th correction wave, then it would be followed by a 5th impulse down that means continuation of the previous downtrend. All big moves start on small time frames and then grow and get support from older time frames. Let us step down to smaller time frames and try to find any proof.
A daily chart does not show any bearish impulse, just a correction down wave. However, the 1st bullish momentum has a level greater than a daily time frame that is a weekly level as we stated above.
If we take a 4-hour chart, we will be facing a 3-wave bearish structure plotted with aqua lines. In a short-term we will watch it developing.