The last time the WTI crude oil market was thrown into a whirlwind consolidation range was on the way out of its pandemic bottom.
As many of you who were watching the market at the time are aware, the US benchmark for crude oil went negative for the first time ever in April 2020.
The front expiring, deliverable contract fell into the negative $40 range. No one even knew this was possible at the time.
The margin calls that came in as people were trying to “buy the bottom,” not thinking a negative price even existed, were excessive.
So much so that they even halted trading front expiring contracts for retail traders.
It was a wild week for sure!
But what came after all that is what I’m focusing on today, as I’m seeing a lot of similarities to the current WTI market.
Pause to Refresh
Now, once cooler heads prevailed, crude oil bounced back until June 2020 and then consolidated for approximately six months.
From the beginning of June 2020 through mid-November 2020, this market essentially went nowhere.
That’s right… It just floated sideways for nearly six months. Then, once it broke out to the upside, it was off to the races.
Crude had an incredible run to the upside, which offered opportunities to make money hand over fist.
History Ready to Repeat?
Recently, this market has suffered new pain, particularly in February of 2022.
As regular readers know, Ukraine was invaded by Russia, which is one of that continent’s largest providers of energy.
In fact, the entire globe experienced disruptions in one way or another as a result of the invasion.
The question at this point is, “Now what?”
While this market has been challenging lately, there is always the chance that history could repeat itself.
In the current weekly chart above, you can see the new tightening pattern that’s developed following the knee-jerk from the invasion.
Essentially, the market is in a consolidation pattern similar to what we saw in 2020 only a good bit wider in its overall range.
With that in mind, we’re looking for the next big breakout from the current consolidation.
Originally, it looked like it might break out back in May, but the price rolled over to further consolidate.
This happens, and typically the longer and larger the consolidation, the more aggressive the follow-through tends to be when it does occur.
It’s all a matter of proper positioning and patience.
Join Me for the Breakout
Now, if you want to make sure you get my market call when crude oil breaks out of this range, consider joining me at The Speciale Report.
This premium trading service focuses exclusively on the energy markets, so I highly encourage you to check out it out.
We trade crude oil and the energy sector in the futures, ETF and options markets, all of which give members the opportunity to trade at their comfort level.
That’s the beauty of The Speciale Report’s trade ideas… We accommodate all styles of traders.
There’s really something for everyone!
I also host LIVE class sessions every Wednesday in which I share my thoughts on all the markets I’m watching.
I hope to see you there next week!
Rules to Live By
“Believe you can and you’re halfway there.” Theodore Roosevelt
Until next time, I wish you a beautiful and blessed day!
Yours In Trading Success,
Anthony Speciale Jr.
