Monday, June 23, 2014

BRENT Brent Crude Oil Weekly Chart Sideways Symmetrical Triangles Sideways Channels

Crude oil is a major focus of global traders as the Iraq turmoil continues. Commodities and commodity currencies bounce today after the stronger than expected China PMI data. European PMI's, especially, France, are on the disappointing side. Brent breaks up and out of the yellow triangle at 108 so the upside target is a lofty 144. A retracement and drop under 108 would open the door to 72. The former is the inflationary outcome and the latter the deflationary outcome.

Considering the ongoing Iraq conflict, trader consensus is up. Interestingly, if a global slowdown appears and takes hold, oil demand will drop sharply leading to a far different outcome than expected. The sideways symmetrical triangles many times will morph into longer more extended sideways triangles so the pink triangle is in play. Price broke out above at 112 one week ago and would target 149 on the upside the same target as the yellow triangle; call it 140-150. If price retracts and drops under 105 (lower pink trend line), price would seek 79, again, in the neighborhood of the yellow triangle downside target; call it 70-80.

The indicators are long and strong in the VST favoring the upside breakout except for money flow. The key will be if the indicators move above the thin red line, or not, if/when price matches the September 2013 high at 117-ish. If the indicators remain under the red lines this will create negative divergence and hint that the upside will be limited as the next couple months play out. If the RSI breaks above the red line then price will likely remain elevated for several months forward.

The white sideways channel 105-118 is in play and price inches higher to test the upper rail. Considering the long and strong indicators for the short term (green lines) a move through the blue channel at 112-118 may be prudent for the next few weeks as the Iraq drama plays out. The Brent oil bulls win big above 118. The oil bears remain in the game under 118 and will receive downside fuel under 112. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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