After rallying 20% during its mid-2023 rally, Exxon Mobil (XOM) reversed sharply from its late-September peak.
It had a brief counter-rally in October. But otherwise, XOM’s slide continued right through January this year.
When we checked in on XOM a couple of weeks ago (red arrow in the chart below), XOM appeared to be turning things around…
It had just bounced from its January low as buying momentum returned. And it looked set for its rally to develop further.
Yet since then, XOM has been consolidating. So let’s see what’s coming next…
Several Strong Peaks
The chart of XOM below shows its broad sideways pattern throughout 2023.
The 50-day Moving Average (MA, blue line) meandered sideways. And the shorter-term 10-day MA (red line) crossed it multiple times in both directions.
Exxon Mobil (XOM)
Source: e-Signal
Within this sideways pattern, you’ll notice several strong peaks in February, April, and September 2023.
As the chart shows, XOM retraced off each of these peaks along with a clear reversal in momentum.
That’s shown by the Relative Strength Index (RSI) retracing from overbought territory (upper grey dashed line) and slipping into the bottom half of its range.
These drops coincided with the 10-day MA crossing and tracking below the 50-day MA.
Yet it’s the reversal from the September peak that set up XOM’s huge fall, which carried right into this year.
The initial plummet corresponded with the RSI sliding from overbought to oversold territory (lower grey dashed line).
And after the October bounce, XOM continued to fall. The RSI was stuck in its lower range, and both MAs tracked lower. (Note that XOM’s October bounce failed when the RSI was unable to break through resistance.)
Another false rally in December failed – again with the RSI unable to gain traction in its upper band.
But then XOM finally rallied off its lows with a common reversal pattern.
Take another look:
Exxon Mobil (XOM)
Source: e-Signal
The RSI made higher lows (lower orange line). That eventually halted XOM’s fall and pushed it higher (upper orange line).
When we checked in on XOM last month, that positive momentum had just pushed the RSI into its upper band.
And the blue MACD line had recently broken above the orange Signal line. This action suggested XOM was setting up to rally further.
But XOM has since tracked sideways. So let’s check where things could be headed from here…
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XOM Needs Momentum
After the burst higher last month, XOM has been consolidating sideways. This has coincided with the RSI tracking along the top of support (green line).
If the RSI can remain in its upper band (and rally further), this will give XOM the momentum it needs to rally from here.
The first test for XOM would be to break above short-term resistance at $105.
The other thing I’m watching is the MACD.
As you can see, since the MACD line broke above the Signal line, the two have closed back in on each other.
For XOM to rally from here, we’ll also need to see the MACD line accelerate higher above the Signal line.
Regards,
Larry Benedict
Editor, Trading With Larry Benedict