Crude Oil traded quietly throughout the session Tuesday, but could see a major breakout opportunity ahead. Here’s the setup that’s showing the tell..
Inside Value
The 15-minute chart of Crude Oil shows price coiled over the last day of trading. As a matter of fact, price developed within the boundaries of the prior session’s price range. While this alone can usually forecast a major breakout opportunity, the setup below offers the real tell.
You’ll notice the developing pivot range (three dotted lines) actually closed the session within the boundaries of the current day’s pivot range. This means the upcoming day’s pivot range has developed within the boundaries of the current day’s pivot range, which amounts to an Inside Value relationship.
If you want to read more about the Pivot Range, read A Quick Guide to the Pivot Range.
As you may know, the Inside Value relationship is one of my favorite setups, as it usually leads to major breakouts that often result in trend days.
If price opens the session outside of range and value Wednesday morning, we could see a big move on our hands, so watch $82.50 and $83.75 closely for a violation.
Targets to Watch
The current 10-day ADR (Average Daily Range) is $3.18, which means the average daily price range in Crude Oil has been $3.18 points over the last ten days.
The fact that Tuesday’s price range was only $2.65 (much of it occurred in extended hours trading) further confirms that a breakout could be seen tomorrow.
Should a breakout occur, Wednesday’s price range could be between $3.00 and $4.00, as trend day’s usually see an increase of about 25% on the current ADR value.
Therefore, I’ll be watching $86 to $87 for bullish targets, and $79 to $80 for bearish targets.
Again, a breakout from Tuesday’s price range is important, so keep an eye on $82.50 and $83.75.
Let’s see how this one plays out!
Cheers!
Frank Ochoa
PivotBoss | Own the Market
Follow Frank on Twitter: http://twitter.com/PivotBoss