Wednesday, October 7, 2015

WTIC West Texas Crude Oil Daily Chart Sideways Triangle Upside Breakout

The big jump in oil over the last three days is sending oil, gas and energy stocks strongly higher sending the broad stock market higher. Russia and Saudi Arabia talked last week and are apparently planning to reduce production. Russia is firing missiles off its war ships into Syria so the unrest in the Middle East adds oil price lift. The jump in price cannot be due to greater global demand since the Baltic Dry Index, BDI, remains in the gutter and it should be moving higher if the global economy was healthy. The oil rise may simply be the mother of all short-covering rallies.

The tight standard deviation bands squeeze out the move. Price is already violating the upper band. The indicators are developing a long and strong profile wanting to see higher highs in price after any pull backs. The green sideways triangle has a vertical side of 6 or 7 handles so from the 45-ish breakout the 51-52 area is targeted. The 200-day MA resistance is 51.14 and serves as a price target.

The white dots show a potential two-leg bull flag pattern the first leg from 38 to 49 which is 11 handles, then sideways consolidation, then say the upside starts from 44 so 55 would be targeted. Typically you want to see the sideways consolidation move slightly lower whereas the oil price went sideways instead but it is close enough for government work.

Interestingly, price is at the late August highs but the histogram and stochastics are negatively diverged. So price may continue higher albeit at a slower rate as this upside energy burns away. Looks like the oil bulls will be in charge for a few days or weeks. The weekly chart indicators are long and strong pointing to more upside on that basis. So price may play in the 48-60 area over the next month. 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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