Chart 1: Brent Crude Oil is now attempting to break out on the upside…
Source: Short Side of Long
Another update as there has been quite a lot of price action over the last few weeks. It seems certain assets which have been in downtrend or sideway consolidations are trying to stage a break out. We will soon find out the success of these moves.
Let's remember that silver is at a major decision point. This is also seen in the Central Fund of Canada ETF (60% gold and 40% silver) and EM equities, which have also started to break out on the upside. Furthermore, Japanese yen remains in a very narrow range, from which a major move is about to develop - but more on that over the weekend.
Today, I am focusing on energy and yesterday's major jump in Brent Crude. As we can see in Chart 1, Brent Crude is now trying to break out from a prolonged consolidation pattern. At the same time, Chart 2 does a great job of showing low volatility as well as a flat 200 day moving average that is compressed with the price.
This is usually a rare event, because prices rarely stay at a so called “equilibrium.” Usually, periods of low volatility are followed by periods of high volatility and visa versa, so expect a major move soon.
Chart 2: Brent Crude Oil has been dead quiet over the last few years!
Source: Short Side of Long