Oil is breaking down in wave C from a B wave triangle. The target ranges from 87.09 to 73.23 representing prior swing highs (not shown). If wave C = wave A, the target would be 79.75.
One point that should not be lost on this view of oil is that the overall decline is corrective since it is a 3 wave ABC decline (almost a certainty given the B wave triangle). Several analysts have been interpreting the top in oil as a bearish signal for the stock market with projections for oil below the 2009 low. We know that the decline in oil from the 2008 top was impulsive and wave c down should also be impulsive, so if the current decline is corrective, oil could very well go to new rally highs. This is bullish for the stock market and supports the view that the current correction in stocks is just that - a correction and not the resumption of the bear market. However, we must keep in mind that the correction in oil could become complex and extended along with the correction in stocks.