When we last looked at XOM on January 25, it was trading inside the Symmetrical triangle (pattern in red), not doing much of anything. Since then, XOM completed and broke below a Bearish Rising Wedge (pattern in purple) on February 10, then broke and closed below the Symmetrical Triangle on February 11.
Yesterday, XOM put in a low of 72.70, two cents above the December 5 low of 72.68. That 72.68 low was a trendline validation (Blue #5) prior to the run-up to the Fakeout/Breakout high of 83.64, which validated the trendline at the top of the pattern as resistance. That 72.68 low also was the beginning of another validated trendline, the bottom of the Symmetrical Triangle, which was broken on February 11, so that particular data point (72.68) would appear to be pivotal.
XOM closed yesterday's session back above the bottom of the broken Symmetrical Triangle, which always is a pain in the neck because it calls the breakdown into question, but it didn't do it by very much. A couple of pennies. Notice, however, what a pain in the neck shorting the December 19 breakdown of the Bearish Rising Wedge (pattern in blue) has been for anyone holding it for the past two months. UGH.
Still, I'm considering a short position in XOM, especially if it makes a bid for the bottom of the second broken Bearish Rising Wedge (pattern in purple), which comes in today, February 13, at 77.01.
A bullish case for XOM is that it's forming a Bullish Inverse H&S pattern with a rather severe upward sloping neckline. That doesn't seem likely, but that case improves if XOM goes barnstorming higher, and knocks out the recent high of 80.50.
Bears need to take down 72.68-72.70 support.
7 comments:
Hi, could you please calculate the minimum price objective of the bearish rising wedge pattern in blue? Looking at your chart, I see that I was drawing the wedge pattern a bit differently and feel my calculation of the price objective might not be fully accurate (obviously I have more stuff to learn :-)
http://patternspy.blogspot.com/2009/02/exxon-mobil-xom-charts.html
Your feedback is most welcome..
Thanks..
Melf,
Am I correct in assuming the bottom of the purple wedge is now resistance (77.01) and a possibly good entry for a short to test the double bottom at 72.70? Also, where do you see a target if the price breaks down below 72.68? Thanks
Melf,
Am I correct in assuming the bottom of the purple wedge is now resistance (77.01) and a possibly good entry for a short to test the double bottom at 72.70? Also, where do you see a target if the price breaks down below 72.68? Thanks
Austin,
Wedges that have a sharp slopes, like the first one in blue, are tricky because they usually "morph," or change, into something else, as this one did. Rather than sell off sharply when it broke on December 19, it had a sharp rally "chasing the bottom of the Wedge, then essentially went into a sideways trading pattern.
Sometimes, these Wedges return all the way to the bottom of the pattern, which was 56.51 (Blue #1), but that isn't always the case. I use the horizontal data points (Blue #3 and Blue #5) as targets, which are 68.30 and 72.68. We essentially got the 72.68 at yesterday's low of 72.70. That sure took a long time since the break of the Wedge on December 19!
I also use Fibonacci retracements of the 56.51 low, to the 83.64 high.
.382 = 73.28 (The low at Red #2 was 73.27, within one penny).
.500 = 70.075 (That's also the second Bearish Falling Wedge target (pattern in purple), which is interesting). I'll explain that in my response to Mark.
.618 = 66.87
Good luck!
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Mark,
The second Bearish Rising Wedge (pattern in purple) put 70.07 IN PLAY, which also is a 50% retracement of the Bearish Rising Wedge (pattern in blue) that I just mentioned to Austin.
Math:
80.50 - High of the pattern
74.01 - Low of the pattern
80.50 - 74.01 = 6.49 points of downside.
The bottom of the pattern was at 76.56 when it broke on February 10 76.56 - 6.49 pts. - 70.07 IN PLAY.
When you get two targets that are nearly the same (70.07), that increases the chances of getting it, but never any guarantees of course.
The Symmetrical Triangle (pattern in red) break put 65.64 IN PLAY, but it's ON HOLD as long as XOM trades above the bottom of the pattern.
Math:
83.64 - High of pattern
73.27 - Low at Red #2
83.64 - 73.27 = 10.37 points of downside
The bottom of the pattern was at 75.833 when the pattern broke on February 11.
75.83 - 10.37 = 65.64 IN PLAY
Check my math on all of these targets, guys. I'm trying to calculate and type fast ;)
Boy, I was tempted to short XOM at the close yesterday after TWO pattern breakdowns. Given the sharp late day rally, I thought it might make a run this morning for the bottom of the Purple Rising Wedge.
Good luck!
Thanks Melf! Great place to learn real life chart pattern analysis. Thanks again..
You're very welcome, Austin. I checked out your blog. Wow, that was quite a coincidence that you've been posting on XOM!
Just a suggestion: When drawing trendlines, try not to cut through wicks, and especially try not to cut through the "real body" of the candles (that's the fat part that identifies the open and the close). When we do that, we already know that the trendline isn't reliable because support or resistance already has been violated.
Look at the THREE validated trendlines on the chart on this thread. Once we connect two data points, if price finds support or resistance there, that's called a trendline validation, and those tend to be significant when they are violated, or when they're retested after a violation, and fail.
Just a suggestion. They're YOUR charts. You get to draw the trendlines any way that YOU want to draw them ;)
Good luck!
Hi Melf, many people were mentioning XOM at xtrends so I thought I will draw some trendlines on it :)
Thanks for the feedback.. Hoping to learn a lot more from your posts.. Thanks..
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