Thursday, June 16, 2011

Long Term Crude Oil Targets

 As WTI breaks down from the month long consolidation it's been in, putting fresh lows in under 94.63 yesterday, a review of Elliott Wave measured targets might be useful.
As seen below breaking the trendline and overlapping the 83.80 level will both serve as moments of recognition for the market.... recognition that the structure up labeled B is well and truly complete.

 Active Mo. Weekly
 click to enlarge

So where is the C wave headed?
 From the May 8 post Crude Oil Targets

 "Longer Term targets for the C wave;
The A wave is a 5 count down and the B wave is noticeably below the high and was a complex series of abc structures. So as unlikely as it may seem,  the most common outcome is that the C wave is  going to consist of 5 waves, and carry below the termination of A at 32.40, for a simple zig zag, 5-3-5 structure.
 The A = 114.60, so C will equal A at  23 cents. Now that seems a little unlikely ( the symmetry there is interesting though).
The A wave came off 78% from the highs, so in percent terms C= A at 25.26

The C wave =  .78 of the A  at 25.41
The C = .76 of the A at  27.70
The C= .618 of A at 43.98.
The above 43.98 = a 76% retrace of the 10 to 147 final move up in the previous structure as well. "
Personally I like splitting the the difference between 25.26 and 27.70 for 26.48.
If the C down last as long as the A wave (5.5 mo.s ) it should bottom around mid Oct.
This ABC down from 147 is presumably correcting for the 5 waves up from roughly 1930  or 1917, both lows were sub 1.00 or near enough it makes little difference.
Important thing here is the very long term nature of these moves. 
The 4th wave of lesser degree was from 1980 to 1999, when WTI range traded between 41 and 9.75.-
19 years! 
It's possible that the correction we.are in now last as long or longer, but given the predisposition of Central Banks to print in response to deflation, it seems unlikely that it drags along the bottom for long.
So the good news is that from the targeted lows, some serious rally potential will exist. Perhaps another abc up for a B wave of greater degree will develop. It is also possible, though  less likely, that the 147 high was -1- of 5 of 5 and that this ABC collapse will be the -2- to be followed by a monster increase in the price (as the USD completely collapses or we run out or both). 
 Just for fun;  the hypothetical -1- wave of 137 x 1.618 = 221 , targeting 248.15 from 26.48.


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