Crude oil has been trading in a tight congestion pattern lately and it's starting to look like a coiled spring that is about to explode. I've been hearing some chatter lately about oil getting ready to move, etc., etc. There are also some analysts saying that OPEC cuts are going to lead to a short term rise in oil. Anyone who reads my blog knows that I don't care about chatter or what analysts tell Bloomberg, I care about the current chart pattern. Here's a daily chart of oil:
As you can see, there is a congested trading range (the light rectangle) and within that range a wedge of some sort (I can never remember all the technical names for different wedges and triangles) is forming. I think a strong close above or below one of the yellow lines will be the signal to look for and by a strong close, I mean a candle that is much longer (bigger range) than the recent candles accompanied with a close at the high (for a bullish break) or low (for a bearish break). From the looks of the chart, I would imagine that the break will be to the upside. Why? Well, the fisher transform and the stoch have been trending upward during the recent consolidation...indicating to me that there is upward momentum building. You certainly want to keep an eye on oil and wait for a break from the wedge before entering the trade.
Good luck out there.
TLT
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