What IF in CL

With Crude Oil about 50 cents away from a potential critical overlap, it seems like quite an omission for a major Elliott Wave service to not address in their monthly report, "What happens IF Crude Oil should, in fact, overlap?"

First, let's start with the potential overlap, and the problem it would present. It seems fitting to present this chart in patriotic red, white & blue.

CL Futures - Monthly - Potential Overlap

The problem such an overlap would present is that it would no longer be possible to count the waves down from the 2011 low to the present as an impulse wave. The critical level is $74.95, and it hasn't quite happened yet.

But, IF the overlap does happen, and, if CL is to be seen in a zigzag downward then there are four good possibilities.

1.  The zigzag completed as Primary ((W))-((X))-((Y)) at the 2016 low.
2.  A running triangle Primary ((B)) wave is forming.
3. A flat Primary ((B)) wave is forming.
4. A primary ((C)) wave is still forming as an Ending Diagonal.

Of these, because of the choppy nature of the current up turn, the one that seems most fitting to outline more closely is the Ending Diagonal for a Primary ((C)) wave lower, as follows.

CL Futures - Monthly - Potential Ending Diagonal for Primary ((C))

This chart would diagram a contracting ending diagonal for the Primary ((C)) wave of the zigzag following the waterfall Primary ((A)) wave that occurred in 2009.  The 2011 low would be the A wave of a zigzag lower for Intermediate Wave (1) of the Primary ((C)) wave diagonal. The clearest five-wave pattern from the 2013 high to the 2015 low would be the C wave of the zigzag for the Intermediate (1) wave. A diagonal would be allowed because Intermediate (1) did make a lower low over it's Primary ((A)) wave, showing it's motive wave character,

The 2016 low to the the 2018 high (continuing) would be the Intermediate wave (2) of the diagonal. And the chart predicts a reversal down in Intermediate (3) of Primary ((C)), which would then be required to make another marginal lower low in prices. This to be followed by Intermediate (4) higher, and Intermediate (5) lower. While Intermediate (5) should make a lower low, if it is the last wave in an ending diagonal, it may truncate slightly.

We warn at the outset, that there is no clear sign of downward reversal yet, and before considering this as anything more than a potential pattern, a sign of that reversal should be seen first on no less than a weekly chart.

If the pattern ended at the 2015 low, or if the Primary ((B)) wave does go on to make a flat, then new highs would be expected above $118. The Ending Diagonal is outlined because it seems to fit with the current choppy three-wave upward price movement, and it is apt that a SuperCycle might end with such a large diagonal. A diagonal would also provide excellent alternation for the impulsive Primary ((A)) wave down in 2009.

The Primary ((B)) wave triangle would be a "running triangle" because of the lower low. But that would seem to be too bearish a pattern for the allowed price movement lower (can't go below $0). So, the diagonal seems to fit better than the triangle.

And, while nothing is for certain we take a view based on the waves we can currently see. And, while the overlap hasn't happened yet, the upward wave as a fourth wave is getting very non-proportional to it's second wave. And that's what causes us to look ahead.

I too will take some time off over this summer holiday, so enjoy it to the fullest possible.
Have a great rest of the weekend & a great week.
TraderJoe

P.S. There were two other posts this weekend, in case you missed them.