When the C wave has just started its fifth minor wave down, it sets up a buying point.
First, that Wave C is once again related to Wave A, and secondly, there are five minor waves making up Wave C.
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As for the bottoming targets for this e-wave, while both the a-wave and c-wave bottomed at the 29 level, it is quite possible that this is the target for this e-wave as well.
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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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.
It is normal for wave C to be related to wave A by a measure of 138.2%.
It will be of interest to readers that Wave C was exactly equal to Wave A. Once again, this fits in with the Elliott Wave theory that says alternate waves in a correction tend to be related by a Fibonacci ratio, and 100% is a key number.
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The chart shows that Wave C is probably in the middle of a minor third wave. which means we should get a small dip as wave 4 followed by another rally as wave 5.
This is followed by another decline (wave c) that will generally drop well below the low of wave a, stopping out anyone who bought too soon.
As can be seen from the second chart above, Wave C went just a shade over a 100% measure of Wave A. We also got a second test of the low that held.
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Usually, sentiment for a stock is most pessimistic when it enters the fifth wave of the C, but this is the opportune moment that the trader has been patiently waiting for.
Corrections tend to unfold in three-wave patterns, labeled A, B and C.
C. to kingdom come, and you watch the shock wave roll up, and then you wake, your tongue clamped firmly between your teeth.
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