Since forming the high on Oct 3 at $76.9, Oil (CL_F) has dropped more than 30% in just less than 2 months. The move lower is pretty fast and short term Elliott Wave view suggests the decline is unfolding as an impulse Elliott Wave structure. Down from $76.9, Primary wave ((1)) ended at $68.47, Primary wave ((2)) ended at $69.65, Primary wave ((3)) ended at $54.75, and Primary wave ((4)) ended at $57.98. Oil is currently in the final leg Primary wave ((5)) which looks to unfold as an ending diagonal.
An ending diagonal is a special type of 5 waves in which the subdivision is all in 3 waves. Thus, ending diagonal is 3-3-3-3-3 Elliott Wave structure. Usually Ending Diagonal appears as subdivision of wave 5 or wave C. In Oil’s case, down from Primary wave ((4)) at $57.98, Intermediate wave (1) ended at $52.77 and Intermediate wave (2) ended at $55.86. Intermediate wave (1) unfolded in 3 waves as a FLAT A-B-C where Minor wave A ended at $55.08, Minor wave B ended at $57.44, and Minor wave C ended at $52.77.
Near term, while rally fails below $57.98, Oil has scope to extend lower within Primary wave ((5)). Potential target to end the 5 waves down is 50% – 61.8% retracement of the rally from 2/11/2016 low ($26.05) which comes at $45.5 – $51.5. Afterwards, expect Oil to rally at least in 3 waves to correct the 5 waves decline from Oct 3 high ($76.9).
Oil 1 Hour Elliott Wave Chart