There are many Bullish fundamentals (companies reporting great earnings) supporting the market where it is today. However, a corrections can still ocurr as mostly emotions drive the markets, and not logic.
From a trend analysis, currently the SP 500 is stuck in a wedge pattern, but if it springs up, it will follow a BULLISH uptrend channel....if the first...
Looking at it from a technical analysis, if the price of Oil makes that "double dip" (W) with the RSI or MACD having a higher low on the second dip, we may be looking at the price of oil potentially breaking out of this uptrend channel and creating higher highs. Ofcourse, the fundementals of an increase in US production and from OPEC may drive prices below the...
Looking at the channel trend and fibonacci, Oil may hit a new resistance of on our about $73 and correcting to the 200 Day MA. After doing so, it may reach back up to the top of the Fib 1.618 or top of channel (whichever comes first).
Looks like a short term bounce may happen after oil hits the $43 range and can jump back up to the $45-$46 window....just follow wedge pattern being formed in the MACD and it should give you an idea for your exit or entry depending on how you are trading (short, buy, etc.).
The bounce off the 200 MA did not have enough buying volume and momentum, which can only tell us one thing, there is too much downward pressure.
There is a lot of uncertainty....like always!
I came across the article Crude Oil: "Bear Market" Continues? and the author made a good illustration on how the Elliot Wave theory applies to the oil market we are currently seeing.
If you notice, I used the Fibonacci 1.272 line (high of $62.55 and low of $46.66, which is the end of wave 3) to determine the end of wave 5. As you notice the 1.272 line...
WEEKlY CHART:
-Oil is currently bouncing off the Fibonacci 1.272 extention line (set my high at $62.55 and low of $50.56)
-If Oil does not get back in the uptrend channel withing the next few days.....we are in for another big drop just like the previous glut.
Using Fibonacci Extensions, the 1.272 line shows the support lines for the next few days leading up to Wednesday 6/17. On Wednesday, at 10:30 the EIA will release the weekly US Crude Oil inventories. Based on that data, prices may bounce off of Wednesday's 1.272 support line, which also acts as the bottom support of the uptrend channel (purple line).
