After the initial 3 wave recovery from January 2009 lows to April 2011 peak, Crude made a sharp decline to 74.95 in October 2011, a low that we were to find out later, would lead to 3 years of sideways price action before it would finally give up for the next leg lower. Decline from April 2011 to October 2011 could be viewed as a 5 wave decline which would call for extension lower as far as April 2011 peak remained intact. However, 5 waves can often be a trap (like wave C of a FLAT or being relabeled as a triple three structure), therefore, we were open to all possibilities and even considered the bullish triangle option in April – October 2011 range. In August – September 2014, we were looking for a move to 87.01 – 81.85 area (100 – 123.6 extension down from August 2013 peak) before higher but upon reaching the mentioned area, distribution in our system said that October 2011 low would end up breaking and that’s when we knew with higher level of conviction that Oil prices were headed much lower for remainder of the year and that’s also when we couldn’t help think about this possibility that we presented back in May 2011 in which we called for a failure below April 2015 peak and a move towards $20 a barrel. Current study of cycles and Elliott wave analysis suggests Oil is on it’s way to break 2009 lows towards $20 a barrel mark but most likely in 2016 and not without a bounce first as cycle from October 2015 peak is quite mature and would be reaching an extreme between $35.00 – $33.00 area.
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