FX.co ★ CL/Crude Oil

Oil faces a narrowing range amid easing volatility Oil prices continue to consolidate within a narrowing trading range as volatility eases over the past few months. Oil posted some gains on Tuesday, hitting a daily high of $69.15 before hitting resistance at the 20-day moving average (MA), which is currently at $68.97. Notably, this is the fourth consecutive trading session where the 20-day MA has acted as a resistance point, signaling weakening demand within a broader consolidation pattern. 20-day MA as a short-term Pivot The 20-day MA has become a critical short-term major level, reflecting bearish sentiment unless oil decisively breaks and closes above it. Although there have been three recent rallies where prices have briefly crossed this moving average, sustained momentum is lacking. For any meaningful shift in sentiment, the crude above this center must form a sustained breakout. Consolidation of symmetrical triangle signals The oil also forms a symmetrical triangle pattern, with the lower boundary providing reliable support during recent sessions. Price rejected to the upside from this line on both Friday and Monday, further confirming its importance. However, to break out of the current consolidation, oil must not only breach the 20-day MA, but also break the upper boundary of the triangle. A potential bull wedge A broader bullish wedge pattern is also developing. The upper boundary of the triangle coincides with the critical pivot at $70.68, which is marked by a temporary swing and the 50-day MA. A break above this level could confirm both a triangle breakout and a trend reversal, offering a bullish signal to the market. Likely peak volatility With the top of the triangle approaching on January 3rd, a spike in volatility appears imminent. Whether the breakout moves up or down, oil is likely to see increased activity by the end of the year. Until then, the market remains in watch-and-wait mode.