Final push down in Oil is on the way

Summer across the board, making all kinds of fake moves possible. Oil is not an exception, having hard times deciding what to do next. Time to focus on a big picture.

It looks like on Tuesday, August 1st folks were reestablishing their short positions, which were closed at the end of the month, the day before. Hopefully it was a "technical" move and we will continue a bit higher to 200 Daily MA @ 51.5x December 2017 contract.

Overall USOIL appears to be 2-3 days close to start off a final 5th ABC wave of the Expanding Diagonal (5)th of a major C from 2011.

51.2 - 51.5 comes out to be an area of strong confluence, where 200 DMA and trendline sit alongside some harmonics.

In case the price will travel above 51.2 - 51.5, 52.6x will become another potential reversal zone. Where 0.618 retracement of wave 1 to 3, 0.786 retracement of wave 3 and end of wave B of 3 converge.

Stops should be placed above this area, @ 52.6x. Still the set-up will be violated only above $55 handle.

It is pretty common for wave 5 to be truncated following extended 3rd. So my primary target will be $38 per bbl December contract - January 2016 low. More clear targets would be set while the ABC pattern unfolds.

p.s. CAD heavily overbought and diverging.

Trade safe, control your risk.