The December 14 crude oil contract completed a triangle consolidation pattern at last Thursday’s 82.88 high. The ensuring sell off on Friday dropped the contract to lower triangle trend line support which held at Friday’s 79.55 low.
A breakout from this triangle is now needed to determine the next move for the crude oil market.
Triangle patterns have a 75% chance of being a continuation rather than a reversal pattern. In this case, the continuation would be for a downside breakout under 79.55 support. If this occurs, 75.00-75.50 will become the downside price objective for completion of the triangle pattern.
If the breakout instead comes to the upside above upper trend line resistance near 82.50, 86.50-87.00 will become the upside objective for the triangle. The trend for the market will also turn back higher.
The breakout from the triangle, in whichever direction, should come over the next few days of trade.
Funds are still long 267,304 crude oil contracts, down 12,797 from the previous week according to Friday’s Commitment of Trader’s report.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bullish
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