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Chart of the Day Update:
Oil Double Zig-Zag Towards $84
The U.S. dollar index is down, again, and back at the 75.00 region as investors pushed European stocks higher after navigating a mixed global equity market picture overnight. The risk tolerance play that allowed traders to get the U.S. dollar lower are also the instigators for higher commodity prices on Wednesday, as gold trades around $1150 per ounce and oil around $80 per barrel.
Oil has gained by more than three dollars so far this week, after the completed Short technical correction at $75.50, which was in place since the 21st of October, and shown the four hour chart below.
TheLFB Charting: Oil 4 Hour Elliott Wave view
The correction was shown in the Short wave IV) position of an impulse count, which signaled for a move into a higher, Long, wave V). Corrections can be very tricky sometimes, as in our case per example, which is called a double zig-zag.
Double zig-zag moves are structured by a two simple a-b-c type moves labeled as wave (W) and wave (Y) on the chart above. These two legs are separated by a corrective wave labeled (X).
Once the wave (Y) is complete, usually somewhere around the other side of a parallel channel line, the market reacts in the opposite direction, to approach to previous levels of a larger trend.
On the chart above, traders will see that oil prices are threatening the upper resistance line, around $80.50, where a near-term pull-back could follow before the up-trend continues.
Traders should remain technically bullish, targeting the $83-$84 region (wave V) so long as the market holds above $75.50 support, where the recent corrective wave IV) has found the bottom.