Price Prediction for Exxon Mobil (XOM) Based on Long-Term Charts

05/05/2010 12:01 am EST


Corey Rosenbloom

Founder and President, Afraid to Trade

I’ve written previously about the long-term triangle in Exxon-Mobil (XOM) and had a reader request an update to that analysis, and this time I’ll add a monthly arithmetic and logarithmic trend line to the mix.

First, let’s start with the arithmetic long-term monthly view of XOM:

Click to Enlarge

Starting with the 1995 low under $15.00 per share, we see the large rise over the last 15 years that has taken XOM to its peak of $90.00 in mid-2008, through the bear market fall to $55.00, and now to its present level of $67.00.

You can see the pure price triangle clearer on the arithmetic scale.

The upper resistance boundary rests at $70.00 per share, while the lower rising trend line now rests at the $65.00 per share level as the triangle continues to contract.

For additional reference, the 20-month EMA (green) rests at $69.70 (near last month’s high) while the 50-month EMA (blue) rests at $68.28.

As with all triangle patterns, we would expect a range expansion trend move to occur on a confirmed break of these levels, so keep that in mind as the triangle continues to contract while price remains within the boundaries.

However, the long-term charts are perhaps more viewed more appropriately on a logarithmic scale:

Click to Enlarge

As a quick review, rising trend lines are broken first on the arithmetic (price) scale versus the logarithmic scale (percentage).

You see that is true above as you compare the trend lines from the 2003/2004 low (which also stretch back to 1995 on the log scale).

What that means now is that price is supporting—forming the lower support boundary—on the long-term monthly logarithmic chart trend line as seen above, which also rests at the $65.00 per share level.

Use these charts and these trend lines as references into the future as the stock remains within the boundary lines, and be on alert for any strong break outside of the boundaries.

By Corey Rosenbloom of Afraid to Trade

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