Trendless Crude Oil Building Up To Breakout?

The crude oil futures chart paints a picture of trendlessness as markets head into the end of the year. Counterintuitively, this can be a period of major opportunities (and risks) for traders when price eventually breaks out to one side or the other.

Looking at the situation more closely, the major moving averages are clustered together and mostly trending sideways. Even the overall chart pattern is triangular, bouncing between a downward trendline beginning in early July that has been tested multiple times and an upward trendline starting at the yearly lows near 75. The RSI is in bullish territory above the 50 midline but is giving little in the way of directional clues, while the Average Directional Index (a measure of trend strength) gives a reading of 10, which is quite low and suggests no clear trend.

There are many potential sources of support close to the current price, the first of which is the Volume Profile Point of Control (the price level with the heaviest trading activity) near 87. Look next for the confluence of the lower trendline of the triangle pattern with the 252-Day Exponential Moving Average from around 85-86, and beyond that at the recent lows near 81. As for resistance, the upper trendline of the triangle is a point to watch, with further resistance near 93 based on the recent highs.

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