Oil update 10/18

USO: The recent advance (since the June lows) is messy and overlapping and could be an ending diagonal 5th wave. What is more important is the fact that USO reached almost the 1.618x Fib-extension of major-a/1, measured from major-b/2. Thus this was, or is getting very close to completing major-3/c. Why the 1, 2, 3 and a, b, c labels? Because I am not sure if this is a counter trend rally (Primary-IV) within a larger multi-decade long decline for oil or the start of a new Bull: see figure 2.

USO daily

Regardless, for now I see much more downside risk than upside potential. Even in the case of a 1,3,4,5 count, wave-4 should soon commence -or already be on its way- and bring price ideally back to the 100% fib-extension at $13.50ish. Yes it could still try to really tag the 161.80% extension, but it’s an uncertain setup at this stage. An overlap with $12.50 (wave a/1 high) from here, and even after tagging the 1.618x extension first, means the 1,2,3,4,5 count is off the table, and there was only a large abc up off the 2016 lows for a Primary-IV.  Primary V to new lows will than be underway.

UCO weekly