Exxon Mobil (NYSE: XOM), the Energy Company, advances in a leading diagonal pattern from March's low of $30.11 per share, which currently looks near to complete its structure.
XOM's intraday chart shows an overlapped five-wave sequence that, according to the Elliott Wave Theory, corresponds to a Leading Diagonal Pattern.
This formation is composed of five internal segments, overlapped one each other and following a 3-3-3-3-3 sequence. The structure tends to appear in a first wave, after or previous to a high volatility movement.
In this case, we observe that XOM moves slightly higher after the massive sell-off in the stock market that began on February 20th, which dragged to Exxon to be in the bear market.
The RSI oscillator shows a bearish breakdown; however, the leading diagonal pattern observed in the hourly price chart could be incomplete, because the price action sill keeps moving above the trendline that connects the waves (ii) and (iv) of Minuette degree labeled in blue.
In consequence, while XOM remains above the trendline (ii)-(iv), the intraday bias will continue being bullish. At the same time, once the fifth wave of Minuette degree finishes, the leading diagonal pattern, it will complete a wave ((i)) or ((a)) of Minute degree labeled in black.
On the other hand, if the fifth wave (blue) finishes, it means that the leading diagonal pattern has completed its sequence with a failure of the fifth wave. In this sense, the validation of the completion of this structure should be followed by the breakdown of the trendline (ii)-(iv).
After this completion, XOM should start to retrace in a three-wave sequence. In this context, if the price action doesn't extend beyond $30.11, Exxon would complete a wave ((ii)) or ((b)) in black, giving way to a new rally.
Regarding the next path, be it wave ((ii)) or ((b)), the retrace experienced by XOM could warn us about the potential next movement. In other words, if the retracement doesn't extend beyond 38.2%; thus, likely the following path should have a higher bullish momentum, and the move could develop an extended wave.
In conclusion, our preferred positioning remains on the long side, expecting the correction before placing our positions on the bullish side.