Earlier today I spoke with EWI's Energy Specialty Service editor Steve Craig to discuss which energy markets have his Elliott wave radar buzzing, and why.
Nico Isaac: So, Steve. What market(s) look most favorable to you right now?
Steven Craig: Natural gas. It's been trending well of late. (Editor's note: Chart shown below; some Elliott wave labels erased for this article.)
NI: Could you explain what Elliott wave pattern appears on the chart?
SC: Certainly. It looks like prices are in a small-degree fifth-wave decline. In Elliott wave terms, waves 1, 3, and 5 are motive waves -- that is, they move in the direction of the larger trend -- while waves 2 and 4 are corrective; they are pauses within that trend. Motive waves have a five-wave structure and powerfully impel the market.
NI: What tools are you using to determine how low this fifth wave may send natural gas prices?
SC: Common downside targets are where the fifth wave equals 1.618 times the first. If prices do, in fact, adhere to this formula, then they have no business rallying above certain price resistance levels that I identify for subscribers in my Service.
NI: Are there any other technical indicators you are looking at to bolster your outlook?
SC: If prices stop in the target range I am anticipating, then I will look for continued divergences between the price, the RSI and MACD -- to determine whether this ostensible fifth wave is only the initial leg of a much larger five-wave decline.
NI: When do you see this opportunity presenting itself?
SC: Right now.
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