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May 042010

Today I came across a report where an analyst was calling for BP to reach 730 pence from its current level of around 575.50. However, from an Elliott Wave perspective, the outlook for BP doesn’t look so rosy. I am of the view that we are headed a lot lower. Take a look at these two charts. The first chart on BP shows that wave 3 was extended, being 3.618 times wave 1. We also see that wave 4 was an irregular correction, which follows the elliott guideline of alternation. The 2nd chart confirms that the 5-wave progression was finished around 722 and so a full-blown correction was due anyway. Wave A of the anticipated 3-step correction was finished and we also got a wave B before the oil spill news hit the market. So we have probably embarked on wave C which has targets at 310.

Updt: 7 May 2010: Someone asked me a question about the 5-year time frame for the correction. Remember, that time runs from the top of wave 5 (at 722) and not just for wave C. As that top was posted in early 2006, the correction will last at least till early 2011.

  4 Responses to “Elliott Wave outlook for BP (Energy Company)”

  1. Dear Ramki:

    This is my first comment on your analysis since I have just found your very nice website. I`m a newbie to Elliot, so it`s for sure I could be wrong, but I remember that in Robert`s Balan’s book, it says that 3.618 is not a Fibo ratio so the next extension should be 4.618 instead. What do you think about this? Does this could change your Wave count?

    Thanks for sharing your experience and knowledge.

    • Hello Epifanio, That is a very good question. You are right in saying that 3.618 is not a standard Fibonacci projection. However, over the last 25 years, I have seen several instances of the market respection not just 3.618, but also other ratios such as 2.382, 3.382 etc. Why these levels work, I have no idea. Just bear in mind that ratio analysis is subbordinate to wave patterns and personalities. These ratios are “likely” levels and hence are not sacrosant. Good luck in your pursuits.

  2. Ramki,

    Thank you for sharing your excellent EW analysis. In regard to your analysis of the BP, you expect the wave C correction to last at least 5 years. How do you make your time predictions? I have focused my analysis on wave structure but not time. Could you please recommend some educational sources that would allow me to acquire knowledge as to expected time needed to complete wave structures.

    Thanks again for your excellent analysis.

    • Pete, the downmove for the energy company BP will take 5 years from the end of Wave 5, not just for wave C.How do I anticipate the time? Well, when a five wave sequence is comppleted, the ensuing correction will be larger than either of the two corrections in the preceding impulse wave both in price and time. As wave 2 took 5 years, you should expect the correction from 722 to last atleast 5 years. As the top was posted in 2006, the bottom will be seen after January 2011.

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