WTIC West Texas Crude Oil Daily Chart Diamond Continuation Pattern

Oil is the big story nowadays. The yellow lines show a diamond pattern after the first leg up in price. Typically, bull flags or pennants will form in this area, the diamond patterns do not occur as often. The diamond signals either a drop off and collapse in price coming, or a second leg launch higher. Typically when diamond patterns occur after long moves up that will be in concert with a pull back, and visa versa, diamonds may signal bottoms after a long move down.

On this oil chart, the diamond occurrs after a first leg move from 77 to 102. When price broke above 102 it was obvious that the bulls were starting to run with the ball and the diamond resolution will be higher. When the breakout move up out of the diamond pattern occurred, that was the tell that a second leg up is likely on tap. Since the first leg moved 25 ticks, and the second leg begins at 97, thus, 97 + 25 = 122 price target.

This would sync with Keystone's 80/20 rule when a price breaks the 80 level it seeks the 20 level, thus when price was closing above 80, this always left the door open to 120. Also, 118 leads to 122. This strong spike higher needs to take a rest but looking at the green lines for the indicators, all show long and strong profiles and signify that price will want to see another new high after a pull back occurs. Thus, the 120-ish, to satisfy the diamond pattern, is very much in play for the days or weeks ahead. The 20 MA above the 50 MA is bullish. The Middle East turmoil obviously providing the premium in oil price.

Projection would be a move down to 102-103 only to bounce upwards again to target 120-122. At that time the chart can be referenced to see if negative divergence forms. Continued buoyancy in oil price means the M.E. turmoil should linger on. China PMI will also add drama this week since it will help gauge how much of the oil price is due to global growth projections.  Chances are, the high oil prices are mainly due to the ever-increasing dangers in the M.E. 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.