Oil - Zig Zag Correction to $32Between October 2017 and the beginning of 2019, we have seen a 5 wave move from the mid 70's to the low 40's.
Any move that starts with a 5 wave move will end with and at least an equal 5 to complete what is called a Zig Zag pattern.
The was a correction back to test the bottom of the previous wave. This didn't complete a 5 wave move, therefore this must be a 3 wave corrective move, which is the pattern that
sits in the middle of a Zig Zag. An equal move for the top of the 3 wave pattern put the target for oil at $32.
This is confirmed by the RSI failing to get over 60 and forming a double top formation. The entry begin the crossing of the RSI moving averages.
We also saw a large move in the Composite Index, were price did not follow (purple arrow) and a divergence with the RSI giving weight to the analysis.
Any time a indicator moves a great distance and price does not move, and your position is in the direction of the indicator, you are on the wrong side of the market.
This target of $32 is very conservative, as some Zig Zag patterns can run to 1.618 % of the first 5 wave move.
We won't see oil sit a this level for very long, as Zig Zag corrections are a quick and fast way for the market correct, before making a
larger move higher.
