Leading Diagonal in Oil running out of Steam?

Building on a previous post I illustrated 2 possible scenarios for the oil markets. (linked)

Having initially thought we were in the 2nd, it appears I was wrong as this current rally now has an impulsive feel to it.

As you can see there appears to be a leading diagonal patter in play. It will be key to see the market react off the upper bound of this diagonal and reverse lower as illustrated by the red arrows.

There are 2 possible plays -
1) Short Oil on the correction but do not expect it to get below $35.
2) Once the correction plays out, reverse the position, conservative stops placed below $35, with a view of riding a strong bull market over the next several months.

Commentaire:

The bounce off the lower diagonal channel in today's action since this chart was posted leads me to suspect that the high for this "leading diagonal" isn't in place just yet... so I'm expecting one more, very short lived higher high before the bears kick into gear.

There might be a slight "overthrow" above the upper channel before a quick reversal back down. Keep an eye out for this