Welcome to Extreme Investor Network, where we provide unique and valuable insights into the world of the stock market, trading, and Wall Street. Today, we’re discussing the potential breakout in crude oil as it approaches the top of a symmetrical triangle pattern that has been forming for over eight months.
The recent strength in crude oil may be the beginning of an advance towards the resistance at the top trendline of the triangle. This week’s low found support at 72.24, completing a 78.6% Fibonacci retracement, and also found support at the lower boundary line of the pattern. When a consolidation pattern reaches its bottom, there is potential for a swing back to the other side, in this case, the uptrend line at the top of the triangle.
While symmetrical triangles can break out in either direction, there are indications that crude oil may resolve to the upside. The monthly chart shows a long-term downtrend line dating back to July 2008, which has now turned into support after a bullish breakout in December 2021. The 50-month moving average has also acted as a support level, indicating a bullish bias on the monthly chart.
As volatility in crude oil has decreased during the formation of the triangle pattern, this lower volatility environment could set the stage for a potential large move. A breakout above the top trendline will be confirmed once the recent swing high of 84.74 is broken, signaling a potential bullish breakout.
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