Dual Divergent Reversals in Stocks and Crude Oil

Aug 10, 2016: 1:39 PM CST

After holding at the highs, Stocks reversed lower today from their lofty heights.

Crude Oil did too but in less-spectacular fashion.

Let’s view the rally up and the reversal down – complete with mini-Elliott Waves and Negative Divergences.

Advanced traders can track cycles or swings in price.

We look for a specific pattern where a five-wave type advance ends with visual  negative momentum divergences.

If so, it increases the odds (expectations) of at least a decent pullback against the five-wave move.

We see this pattern up into yesterday’s high and today’s pullback on negative divergences (red arrow).

How low will price go?  I included the short-term Fibonacci Levels as a guide.

Oil already achieved its minimum target just now into the 38.2% level near $42.00.

The @ES is slightly shy of 2,167 which is its respective 38.2% pivot.

Look to the 61.8% targets should price break and remain under the 38.2% retracement.

While nothing’s perfect, these charts are great examples of correlated markets, Elliott Waves, and adding momentum as a confirming variable.

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Corey Rosenbloom, CMT

Afraid to Trade.com

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