Oil was one of the weakest markets for the past few trading days. Today is down more than 1.50%, despite US dollar weakness that we are seeing across the board, driving by higher stock market. However, on the next Daily overlay chart between the S&P and oil prices you can see that these two markets (S&P and Oil) were trading higher in the similar manner already since August, which however is not the case for the past few trading days. Could this bethe first but very important evidence of a coming top on the US stock market?! Oil S&P Elliott Wave - Click to enlarge Guest post by Gregor Horvat Some analysts or traders will say that Oil prices are lagging behind that that will turn back higher and catch the stock market very soon. Well, if you are using Elliott Wave Theory, then you know that top on oil is likely in place around 93.00 region. On the 4h chart below we can see an ending diagonal pattern which suggests that top is in place, since wave (5), final leg of a pattern already formed a required sub-wave structure and exceeded a previous blue wave (3) highs. A powerful reversal from the highs with a recent break through the lower side of a pattern definitely suggests that top is in. Oil Elliott Wave January 25 - Click to enlarge As we know an ending diagonal is a special type of wave that occurs primarily in the fifth wave position or in wave C of a corrective rally (like in our case) at times when the preceding move has gone too far too fast. And as such, in most cases the result is a powerful turning point, a sharp reversal against the previous trend. So do not be surprised, if you will see prices much lower in days and weeks ahead. Here is also the basic structure of an ending diagonal Because of lower oil prices during today’s sessions you didn’t see US dollar weakness against the Cad while Aud/Usd per example exploded towards parity. So, with more Oil weakness ahead, which is definitely expected, Canadian dollar will likely lose some of its value in coming days, especially if S&P futures will turn lower as mentioned above, and support the US dollar! If you need more Elliott Wave forecast, especially on the intra-day basis, please visit our website and check Video Tour of Our Products here. Gregor Horvat Gregor Horvat Grega Horvat Grega is based in Slovenia and has been involved in markets since 2003. He is the owner of Ew-Forecast, but before that he was working for Capital Forex Group and TheLFB.com. His feature articles have been published on FXstreet.com, Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu, Insidefutures.com, etc. He recently won the award on FXStreet.com for Best Forex Analysis in 2016. At Ew-forecast he helps clients and educates them about the Elliott wave principle and how to label and track unfolding patterns in real time. His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets such as candlestick patterns, MA, technical indicators etc. His specialty, however, is Elliott Wave Theory which could be very helpful especially if you know how to use it in combination with other tools/indicators. EW-Forecast To be involved in the market effectively, you need the right guidance and resources, and our team can help you to achieve that. Our team is providing advanced informations about Elliott Wave theory in real time. The Elliott Wave Principle gives you a method for identifying the behavior of the markets and at what points the market is most likely to turn. We help new traders who are interested in Elliott Wave theory to understand it correctly. We are doing our best to explain our views as simple as possible with educational goal, because knowledge itself is power! View All Post By Gregor Horvat Opinions share Read Next Assets of Forex Broker Seized After Trading Against A Yohay Elam 12 years Oil was one of the weakest markets for the past few trading days. Today is down more than 1.50%, despite US dollar weakness that we are seeing across the board, driving by higher stock market. However, on the next Daily overlay chart between the S&P and oil prices you can see that these two markets (S&P and Oil) were trading higher in the similar manner already since August, which however is not the case for the past few trading days. Could this bethe first but very important evidence of a coming top on the US stock market?! 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