Oil Triangle

A triangle is one of the 13 patterns illustrated by Elliott. Triangle is one of the five patterns which work against the trend also called as corrective or counter trend patterns. A countertrend pattern typically does not cause a reversal and is generally seen as a pause in the ongoing trend.
The Triangle leads to a more sideways and contained price action representing a balance of buying and selling forces. The formation witnesses a decreasing volume and volatility as sideways action is tougher to trade and is a test of patience.
There are five overlapping waves, which are further subdivided into 3-3-3-3-3 formations, labeled A-B-C-D-E. Position of a Triangle generally occurs in a position prior to the final exhausting up move.
Just like other patterns, identifying triangles is an art. Triangles should be given time to develop rather than counting the five legs too early or forcing the formation.
The true signal of the continuation of the underlying trend down comes when the triangle pattern breaks. Triangles are usually measured by projecting the base of the triangle to the point where the triangle breaks. This way we obtain the first price target.
Here we have illustrated a triangle pattern on OIL (WTM). As you can see on the chart, the A-B-C-D-E structure suggests a corrective countertrend movement which suggests a sideways action before the final leg down on Oil. Current Oil prices are near 45 levels on WTM. As we said in our latest WAVES.OIL, we are expecting a final leg down before anything. Prices should turn down anytime now. The quality of the dip will tell us whether we are making a new low on Oil or the asset has already bottomed.