In our previous post about crude oil we thought the “black gold” is in a post-triangle wave 5. That is why we said it was not a good time to go long on crude oil. Once that fifth wave was over, there was likely to be a reversal to the downside. The next chart shows how the forecast looked like less than a month ago, on April 30th.
Now we could say that wave 4 was not a triangle. Instead, some of the price swings we thought were part of a triangle, turned out to be part of an ending diagonal in wave 5. Nevertheless, the count did not change much. We were still expecting a bearish reversal. The chart below demonstrates how crude oil has been developing ever since.
The price of crude oil topped on May 6th. Less than two weeks later, it stood more than $5 lower. The three-wave decline we were waiting for developed as a W-X-Y double zig-zag. Fourth waves usually retrace the third wave to the 38.2% Fibonacci level. This is precisely the area, where crude oil prices found support on May 19th. So, if this count is correct, wave (5) to the upside could already be in progress. Unless it becomes truncated, it has the potential to take crude oil prices above $64 per barrel.