Sometimes, the B wave trades above the top of wave A as an irregular correction.

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So, at this time, we will watch to see if 5 waves will complete the a-wave, or if we are in the b-wave, with a nice opportunity set up to short USO for a c-wave down to at least 32, with the potential to drop all the way down to 29.

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If we have completed the a-wave at the last low, then the likely target for the b-wave can be as high as the 35.50 region before we see another strong move down.

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The larger pattern we are following is a b-wave triangle, which likely has us now in the middle of the e-wave down to complete the triangle.

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If wave A is made up of three waves, we should expect wave B to trade back to the top of Wave A as a flat correction.

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The first is a decline from the high ( wave a ) that was followed by a rally (wave b ) that typically will stop below the 61.8% retracement resistance of wave a.

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Wave B itself is made up of 3 minor waves, (a), (b) and (c).

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The weekly chart shows that FXE formed a continuation pattern early in 2012, as the break of support (line b) signaled another wave of selling.

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Corrections tend to unfold in three-wave patterns, labeled A, B and C.

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This e-wave should consist of an a-b-c move down.

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We then saw the second set of a, b, c (shown in black) and interestingly, wave c was 161.8% of wave a.

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