January Nymex crude oil futures have been trading within last Tuesday’s 11/20/12, 86,17 to 88.79 range for the past four days. Additionally, Mondays “inside day” (Mondays range is within Fridays range) is another form of balance. An “inside day” within a tight five day balance is ” balance within balance.”

BE READY FOR A BREAKOUT

When a volatile market such as crude oil is contained within such a tight balance for an extended period of time, a significant move usually follows the breakout from that balance.

FIRST STEP
The first step is to see which way the market breaks from the “inside day.” If the market breaks from Monday’s inside day to the upside day, the likely scenario is that it tests lasts Tuesdays 88.79 high. If the market breaks from the inside day to the downside, the likely scenario is that it tests Tuesdays 86.17 low.

SECOND STEP
The second step is to gain so-called “acceptance” outside last Tuesdays 86.17 to 88.79 range

KEY LEVELS
The market may remain within last Tuesdays range for the next several days, but it is best to be prepared for when the break from balance happens. If the market gains acceptance above last Tuesdays 88.79 high, it may test the 89.80 reference.

If the market gains acceptance below last Tuesdays 86.17 low, it may test the 85.10 reference

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