One of the most difficult virtues a trader has to develop is patience, even more so over the last few months where we have seen trends come to a shuddering halt as extended congestion phases build. And if this weren’t enough, this price action has also been punctuated with excessive volatility. Such a technical picture is the result of the vacillation by Fed regarding interest rates.
A great example of this is the daily chart for the WTI Crude Oil November contract which has remained range-bound throughout the whole of September, following the initial surge higher towards the end of August.
Since then the price action for the commodity has been rotating around the volume point of control (the yellow dotted line) in the $45.80 per barrel area, with transacted volume building accordingly. This price region is now developing into a sustained area as described by the VPOC histogram to the right of the chart above, with associated high and low volume nodes above and below.
In addition, the yellow pivots perfectly describe this consolidation phase dynamically, with the floor of support clearly defined in the $43.80 per barrel region, and also coinciding with a high volume node. To the upside the ceiling of resistance now sits in the $47.50 per barrel region with the pivots here sliding away as the price action tightens ever further around the VPOC (volume point of control). Whilst intra day oil speculators will be taking money from both sides of the market, for longer term trend or swing traders patience is required as they wait for a clear break away from the current congestion.
If any further confirmation were needed to prove that patience is the key for oil traders, a glance at the weekly chart is all that is required with small doji candles telling their own story.