Welcome to Extreme Investor Network, where we provide you with unique insights and analysis into the world of the stock market, trading, and Wall Street. Today, we take a closer look at the current situation in the price of crude oil, which is sitting at the support of a large symmetrical triangle formation.
The lows this week in the price of crude oil are testing support at the bottom boundary line of a large symmetrical triangle consolidation pattern that has been forming for approximately eight months. This pattern indicates the potential for a breakout, either up or down, which may be followed by a spike in volatility as the market recognizes the pattern.
One key indicator to watch is the 50-Month MA on the monthly chart, which has been defining support since May 2023. However, since Monday, crude oil has been trading below the 50-Month line, signaling a bearish indication. If crude stays weak into the end of the month and closes below the 50-Month MA for the first time since November 2020, it could further confirm a bearish trend.
In terms of triggers for potential movements, a breakdown from the triangle will be triggered by a decisive decline below Wednesday’s low of 72.71, with the next lower trigger level at the August 5 swing low of 72.24. Conversely, strength will be indicated by a rally above today’s high of 74.76, with further confirmation on an advance above Wednesday’s high of 75.46.
If this week’s support leads to a bullish reversal, crude oil could be heading back towards the top line of the triangle, with an initial target of 81.96 based on a new rising ABCD pattern on the chart.
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