The daily chart shows my Elliot Wave count for USO (the ETF that follows Crude Oil). You can see that Wave5 has extended itself quite nicely. We are now in the final rally in Wave5. MACD divergence is forming, which normally occurs in 5th waves. Also, notice the parabolic uptrend denoted by the trendlines. These patterns are often corrected swiftly once the trendline breaks.
Most interesting to me is the fact that oil is rallying so vigorously after such a strong uptrend. William O'Neil writes about this phenomenon in his book "The Successful Investor":
"... say a stock that's been moving up for several months, but never more than 8 points in any one day, shoots up 12 points. When that happens ... you could be several days away from the ultimate top..."
Crude oil has just had it's best two days ever (in absolute dollar terms). In percentage terms, it rallied about 5% yesterday, and so far has rallied 7.5% higher than yesterday's close. This is on the heels of more than doubling in the past year! This sure looks like the final buying frenzy/blowoff for Crude!The 5-min chart shows in detail the final Wave. Wave5 is underway, so we should see a top soon. Because blowoffs can continue for a long time, my plan will be to wait for a 5-wave decline on the intraday time frame, and then go short on an upward correction. That way I won't be caught off guard trying to catch the exact top.