Oil is working its way neatly down the blue price channel. It’s either maxing out the channel waves before starting a megaphone bottom (green scenario) or its in the middle of a falling wedge (purple) or falling megaphone (orange) bottom already.
We’ll know which it is by when it first breaks the channel top.
Oil has already done its job of confirming the orange megaphone by taking out the August 2, 2016 low. It’s next move could go all the way for the orange megaphone top. But oil could also return to the orange megaphone VWAP at 50 and start a new megaphone there.
If oil is going to go for the orange megaphone top, it will likely attempt a megaphone across 50 that breaks out in a Sornette melt-up set-up without a retrace to VWAP.
A series of megaphones inside megaphones across 50 would imply that oil is turning the inverse head and shoulders on the chart into either an inverse head and shoulders with a triangle right shoulder or a large triangle that will eventually break out downwards.
The inverse H&S with a triangle right shoulder is more likely, and would lead to a large move up on breakout.