Exxon-Mobil (XOM) still remains within a triangle consolidation pattern that has lasted at least since 2009 started, and now we’re seeing an even tighter triangle within the larger triangle.  When will it ever end!?  Soon, perhaps  Let’s take a look at the current XOM Daily Chart.

I last posted on Exxon-Mobil’s triangle on September 21st (reference that post for a larger perspective and more detailed analysis).  Price still continues to contract in the “Value Area” of the $69 region.

The boundaries have now contracted so we need to be watching the $67.50 and $70.50 prices for signs of a potential breakout one way or the other.

Conservative traders may even want to wait for a close above $71 or beneath $67 before trying to take a position – aggressive traders might want to look sooner than that.

I generally don’t like to get positioned inside a triangle, but to take advantage of the “expansion” move that often comes from the breaking of such obvious trendlines (and the “positive feedback” that can occur).

This also reminds me of the lesson that price patterns will sometimes absolutely bore you to tears so that you start ignoring a stock and looking for other opportunities.  When you finally remember “Oh, yeah.  I wonder what XOM is doing,” you check it only to notice that it has already broken out as expected without you on board.

Options traders sometimes beat stock traders because of this tendency – as they’ll put on spreads or straddles to take advantage of volatility expansion one way or the other, which stock traders are tasked with getting direction correct and are subject to whipsaws sometimes.

If you’re by any means adept at trading range volatility expansion plays, I suggest you take a look further at Exxon-Mobil for a possible breakout expansion play.

Corey Rosenbloom, CMT
Afraid to Trade.com

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