Oil is now approaching trendline resistance, retesting the broken trendline from the August selloff. It's pretty clear that the rally from the May low in oil was a 3 wave rally and the August decline appears to be impulsive. Now we seem to have a smaller degree 3 wave rally with a triangle that suggests the next big move in oil will be down. Turns in oil have been leading the stock market since April. Will that be the case today?
The Qs, currently at 46.92 premarket, are approaching the critical price level of the August high of 47.19. This kind of thing is not at all uncommon for [e] waves. As long as the August high is not exceeded, we should continue to expect wave C down to begin. If the August high is exceeded, then we will know that wave C down has been delayed for 1 to 4 weeks. The action in oil today should be a strong indication of what is to come. If oil can break above trendline resistance, I would expect the stock market to do the same.
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