Crude Oil Continues Consolidation in Tight Range

Oct 1, 2015: 10:34 AM CST

We’re awaiting a breakout from the coil or consolidation range pattern in Crude Oil.

Let’s update the pattern and key planning levels for this Compressed Commodity.

As I’ve been highlighting in our Weekly Strategy and Planning Report for Members, Crude Oil remains compressed under its falling 50 day EMA.

Previously, Oil was playing “Ping Pong” in an EMA Compression Pattern, which just means that price was trading up and down between the 20 and 50 day Exponential Moving Averages.

A sideways range has clearly developed between the $44.00 and $47.00 per barrel level as highlighted.

Intraday or short-term traders can continue trading within this range while swing traders need to wait for price to break free of this range.

Note the May to June consolidation which followed the March to April rally.

Similarly, note the July to August breakdown.

According to the “Price Alternation Principle,” price alternates between periods of Range Contraction (as we’re seeing now) and Range Expansion which is the sustained and tradable trending (impulse movement) phases.

We can clearly label the trading range on the lower frame charts for guidance:

On the Intraday frame of @CL (Crude Oil Futures), we can see a tightening or compression of the trendlines into two triangle patterns.

The first broke higher on September 16th for a sudden impulse toward $48.00 while the second triangle broke today for a gap and two-bar rally into $47.00 per barrel.

Price has returned to the inflection Midpoint or “Magnet” of the pattern near $45.50 which will be our focal point for today.

A movement under $45.50 and $45.00 suggests oil will trade back toward the $44.00 lower support target.

Otherwise, a bounce and break above $46.00 could set into motion another rally toward $48.00 and perhaps higher.

For now, “Respect the Range” and prepare for a breakout in the future.

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Corey Rosenbloom, CMT
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1 Comment

One Response to “Crude Oil Continues Consolidation in Tight Range”

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