Dual Divergent Reversals in Stocks and Crude Oil
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
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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).