Yesterday I wrote a blog post about the triangle formation in the crude oil futures (you can read it here.). A triangle doesn’t tell you when the market will break out, or the direction it will take when it does break out, but by monitoring the trend lines that form the triangle, you can trade a break of one of the trend lines like you’d trade other breakout formations.
Friday’s close for June crude oil was still in the triangle; the two lines of the triangle (the red lines) were at 52.90 on the upside and 51.67 on the downside. A breakout trade would have been to sell a break under 51.67.
Once short, the first natural spot for a stop loss was at the session high of 52.41. The triangle’s profit target was the price it started from, 49.05.The next profit target I’d be looking for is the Fibonacci retracement level of 48.48, a 50% retracement of the Feb 19 to March 26 rally.
Met its objective for the triangle
.gif "Follow Up on the Triangle in Crude Oil Futures")
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