Here's how we saw it a week ago. The chart patterns were quite straightforward.
BOTTOM LINE
12/11:
EW Trend: Corrective
Price Trend: Up
Trend Strength: Weak
Broker Consensus: Strong BUY
TECHNICAL DISCUSSION
12/11:
VIDEO ANALYSIS (3 mins 3 secs)
LAYMANS: Our October 20 review highlighted the prospect of a near term bounce to be followed by the resumption of the larger trend. That bounce occurred the very next day and now appears to have terminated below the all important $97.00 level. As such we should now look for follow through weakness in expectation of some new lows being made. If this analysis is correct we should not exceed last weeks highs at $86.60 and start tracking lower with $55.00 being the target with an outside chance of making slightly lower prints, maybe nearer $50.00. It's worth noting that Broker Consensus opinion has moved from Intermediate BUY to it's strongest rating at Strong BUY. As usual we'll let the charts to the talking for us.
TECHNICAL: The chart patterns are quite clear to me so we need to run with them until proven otherwise. At this juncture the highest interpretation is that we've made a minor degree wave-(iv) high which sits within an intermediate degree wave-3 that in turn sits within a larger degree wave-(C). I'll highlight these during tonight's video for clarity. This wave-(iv) off the October 17 lows unfolded in a distinctive 3-wave movement so now we just need follow through to get wave-(v) confirmed so keep a watch on that smaller up sloping channel. The completion of this wave-(v) will also signal the end of the wave-3 that should be followed by a decent bounce into wave-4. I don't wish to get too far ahead of ourselves in this environment so one pattern at a time. Weakness wanted now to $55.00.
TRADING STRATEGY
12/11:
I have tentatively labeled last weeks low at $70.00 a smaller degree wave-i. We may get a bounce in the next day or so to complete the wave-ii and then see prices start sliding lower toward the target. I have traced out a small diagonal channel on tonight's chart. When the lower boundary breaks we're confirmed into the wave-iii but this doesn't offer such a great risk reward. If however we see this wave-ii take a little more upside bounce then one could fade that move with stops above $87.00 enabling a tighter risk/reward opportunity.
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