![]() ![]() Opinions are the authors not necessarily that of OANDA Business Information & Services, Inc. ![]() It is not investment advice or a solution to buy or sell securities. However, failure to hold above US$72.20 key short-term pivotal support (also the 50-day moving average) negates the bullish tone to expose the key medium-term support at US$67.00/65.65.Ĭontent is for general information purposes only. In addition, both the daily and hourly RSI oscillators are exhibiting positive configurations and readings which indicates that medium-term and short-term upside momentum remains intact.Ī clearance above US$77.30 key intermediate resistance (the 200-day moving average & the upper boundary of the medium-term “Descending Wedge”) may see a bullish breakout towards the next resistance at US$80.20/80.70 (the upper boundary of the minor ascending channel from 28 June 2023 low & a Fibonacci extension cluster) (see 1-hour chart). Since its recent 28 June 2023 low of US$66.95, its price actions have started to evolve into a minor short-term uptrend phase and cleared above the 50-day moving average that is now turning upwards. Major downtrend phase has evolved into a potential bullish reversal “Descending Wedge”įig 1: West Texas Oil major & medium-term trends as of (Source: TradingView, click to enlarge chart) Oscillating within a short-term uptrend phase since 28 June 2023 low of US$66.95įig 2: West Texas Oil minor short-term trend as of (Source: TradingView, click to enlarge chart) Since its medium-term swing high of US$94.11 per barrel, the price actions of West Texas Oil (a proxy of WTI crude oil futures) have been oscillating within an 8-month bullish “Descending Wedge” configuration which suggests a potential major bullish reversal configuration in the process since its major downtrend phase from 7 March 2022 high of US$131.30 to low of US$63.67 that recorded a loss of -51.5%. Key short-term support rests at US$72.20, also the 50-day moving average.US$77.30 is the key intermediate resistance (200-day moving average & upper boundary of “Descending Wedge”).Major downtrend phase from the 7 March 2022 swing high has evolved into a potential bullish reversal “Descending Wedge” configuration.The amplitude of the cyclical variations within a broadening wedge increases over time, thus potentially highlighting volatility clusters in higher time-frames. This scenario eventually repeats itself with increased volume, causing impulses and retracements of higher magnitude reinforcing a positive feedback loop until the price is judged overbought even by initial buyers.Ī broadening falling wedge follows the same scenario structure but with sellers instead of buyers. This allows the creation of a new impulse, with only a divergence left. These participants can be composed of initial buyers, accumulating positions, or late traders seeing the potential to buy at a better price. However, before the decline reaches the previously established low, certain market participants buy again. Momentum traders follow the initial impulse further pushing prices up.Ĭontrarian traders judge the price to be trading above its intrinsic value, selling and thus creating a decline in prices. ![]() The cause of an ascending broadening wedge is a surge from an initial buying impulse, driving the price higher. Causes Of Broadening Wedgesīulkowski offers a description of the causes of broadening wedges in the market in terms of the market participant's behavior. ![]() Selling directly after a partial decline would allow for higher profits.Ĭertain analysts close trades caused by partial rises/declines when the price reaches the support/resistance of the wedge, opening a new position in the case of a breakout while using the metric rule for setting their take profit. Selling directly after a partial rise would allow for higher profits.įor a broadening descending wedge the measure rule would place our take profit at the highest high inside the formation. For a broadening ascending wedge the measure rule would place our take profit at the lowest low inside the formation. ![]()
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