USO: Has The Expected Pullback Completed?
Last weekend, we were in search of a 4th wave pullback:
From the 5 minute chart, we are now looking for a wave (iv) pullback in the USO, which should not exceed the 10.65 level. The ideal target for this pullback is 10.75-11. After wave (iv), I am going to expect a 5th wave up towards the 11.75 region to complete the first 5 wave structure we have seen in quite a long time in the oil complex. This should then trigger a wave 2 pullback/consolidation, and set us up to attack the 14 region, with the ideal target now looking to be around 16.
By the time the week completed, I cannot say that I am confident we are on our way to the 11.75 region just yet, as the rally, thus far, does not look terribly impulsive to me. This means we may see another small pullback before we continue to rally higher.
Please also take note of the 144 minute chart I have attached. As you can see, the market has broken out of its downtrend channel, which tracked the market down in what I am counting as a b-wave, and is now only back-testing the channel from which it broke out. Ideally, I would like to see this current micro pullback maintain over the 10.65 level, and then take us to the 11.75 level to complete wave 1 of c. Once that structure completes, I will be looking for long positions on the wave 2 pullback, as our target for the c-wave has a minimum target of 14, with a more likely target around 16.
However, should the market break down before we complete 5 waves up, we will enter a much more complex pattern wherein the green b-wave may continue to form, or we may see a 1-2,i-ii bullish structure setting up off the lows. As I said, if we do not get a clean 5 up, it will make the chart a bit more complex. It also opens up the possibility for a lower low, as presented in the red count. So, I am “hoping” for that 5th wave to complete wave 1 of the c-wave, if only for the sake of clarity in a chart that has not seen much clarity for months.