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Elliott Wave Charts Suggests: “After the storm the sun shines again”


Nov 03 2020

Traders, with Forex Analytix team we put together blog post 2020 US Presidential Elections and Possible Market Outcomes. I also shared some of my charts and analysis there, a piece that is shared below. For full post click here

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Elliott Wave Charts Suggests: “After the storm the sun shines again”

It appears that Libya’s decisions regarding the increase of oil output was just another catalyst that sent oil prices lower last Friday. It’s just one of the issues that energy is facing; much more important is of course a spread of global lockdowns so demand is decreasing significantly in the last two weeks which causes a sell-off into wave C of the Elliott Wave pattern when looking at the price action down from September highs. Well, we see a very strong, three-leg drop for now, but “after every storm the sun shines again”, so despite a very aggressive sell-off we believe that oil is approaching an interesting area of supports. I am watching $34 as a first potential support but I realize that lockdowns may not end anytime soon so the $30.00 can prove to be an even more important level. Ideally energy will make a five wave bounce from there which is needed to call the end of the correction. I suspect oil prices will be back in recovery mode at the start of next year.

Similarly with energy we also see a sharp drop in stocks with the SP500 reversing south into a wave C as well. A good support for this market is the area around 3100-3250, so maybe we are going to see the first evidence of a bounce right after the US elections. We know that some may be looking for a 3rd wave sell-off rather than wave C, which is fine and could be a valid view, but I personally think that it’s always better to label the wave count in the direction of a trend, which is clearly up on higher time frame charts.

Last but not least, gold is another very interesting asset that will always be on any investor’s watchlist, especially during unstable periods like the one we are facing now. With QE in full force, I think metals still have plenty of room to rise. From an Elliott wave point of view I see gold in a corrective fourth wave pullback that can stop at around $1800, where the price retracement would be equal to the one we saw back in March, slightly below 100 SMA.


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