WTIC Oil Daily Chart Potential Two Leg Bear Flag H&S

Oil topped out at 115 in its recent run, now in a consolidation zone leading to a potential two leg bear flag. The second leg would take oil lower to the 80-85 zone. Note the blue circle, the start of the Middle East turmoil premium. Oil was actually rolling over at the time and was staking out a 70-85 zone moving forward, but whamm, the turmoil catapulted oil upwards and built the premium into the price.

The rising wedge, overbot stochastics and negative divergence (yellow lines) across all indicators created the spank down from 115. Note the doji candle as well at the top. From 115 to 95 was a 20 dollar drop for the first leg down. If the consolidation finishes at, say, 102, that would be 102-20=82 target. If price moves up a bit over the next few days that would also help create a right shoulder for the pink H&S and this pattern would also target the same 80-85 zone.

Forces seem to be closing in on Colonel Qadafi so that should drop oil price as well. A return to the 80-85 zone would be prudent as the year moves along and more accurately represent supply and demand, especially with all the inventory sloshing around now and considering that the economy is once again slowing. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.