Last month Exxon Mobil (XOM) was having trouble stabilizing and looked like it was going to trade lower, but prices failed to break to the downside and now XOM looks poised to rally. A month ago we concluded, "A close below $80.50 is likely to precipitate further declines while a close back above $84 will strengthen the chart picture."
Prices have not rallied above $84 but a bullish divergence and a flat 50-day moving average line suggest that I was too bearish on this major oil company. Let's take a look at our updated charts and indicators to see if we want to reverse gears for an upside move.
In this updated daily bar chart of XOM, above, we can see that prices have been finding some buying interest below $81. The 50-day simple moving average line has turned from down to flat in the past month. The On-Balance-Volume (OBV) line moved up in late March and into early April suggesting aggressive buying but the OBV line has been neutral.
In the bottom panel is the 12-day momentum study, which shows a bullish divergence from January to the end of April with higher lows in the momentum study versus equal price lows the past four months.
In this weekly bar chart of XOM, above, we now have a mixed to bullish outlook. Prices are below the declining 40-week moving average line, which tells us that the trend is bearish, but the weekly OBV line has been improving the past three months telling us that buyers of XOM have become more aggressive around $80. The weekly Moving Average Convergence Divergence (MACD) oscillator has narrowed and looks poised for a cover shorts buy signal.
In this Point and Figure chart of XOM, above, we can see that support is in the $80.63-$79.84 area. A trade at $83.91 would be a minor upside breakout.
Bottom line: With crude oil prices trying to firm again we are now more likely to see XOM make an upside breakout with strength above $83.91. Aggressive traders could probe the long side on strength risking a close below $79. A rally back to $88 is possible in the intermediate term.
