Price of Crude Oil Set for Massive Movement

VOT Research Desk

Nov 2

Market Analytics and Considerations

Since the end of August, the swings in December WTI crude oil futures have been getting smaller and smaller. This suggests that, despite its general lack of direction, oil is about to change. Oil had a monster week to the upside in October, but since then it has been digesting.

The wedge that is forming is more than likely to resolve to the upside, according to this price action and the longer-term trend uptrend. However, despite the fact that probability appears to be biased toward the top, confirmation is required.

In conjunction with breakout territory, the 200-day moving average is proving to be problematic at this point. The current front-month contract (December) has resistance around 92.42, followed by more significant resistance in the vicinity of 95. A firm crossing of the 200 and top-side trend line should get things moving for oil.

 Chart from TradingView

A breakout could signal a return to the June highs if the wedge’s size and overall trend higher point to a significant move. Although it would almost certainly take some time to achieve, price action and the structure of the trend lend credence to the idea that those levels will be seen once more in the near future.

On the other hand, a breakdown could occur because the wedge does not itself indicate a direction but rather a move is on the way. The trend line from 2020 is the next level to keep an eye on if oil continues to roll over and confidently take out 85.30. Now that we had a strong test and hold at the end of September, this trend line has significance. The low of 75.70 or lower is at risk if that breaks.

Crude Oil WTI Futures

SMA – Daily