WTIC Oil Daily Chart Channels Bull Flag Inverted H&S

West Texas crude oil price is enjoying a steady rally upwards. During June, the green lines show the lower low in price occurring with positive divergence across all indicators. Price launched as would be expected. The pink bull flag targets 93-94.  The inverted H&S targets 97-98. A congestion area occurred in May at 91-93, and once price fell thru this support zone, it collapsed to 81. Thus, price will have to work to move back up thru this congestion zone since many traders entered long, but had their head handed to them on a pike. The recent bottom is at 78-ish. Key S/R is 78, 81, 83.5, 87.5, 91, 93, 96, 97.5.

The indicators currently display a long and strong profile; the higher high in price is verified with the indicators all moving up as well, except for the MACD histogram that is rolling over. This is the first hint that price will stall.  Considering the multi-day run higher, price needs to rest, and a back kiss of the inverted H&S neck line at 87.5, or the 50-day MA at 86.80 are logical targets. Then oil should have sufficient strength to fulfill the long and strong profile and run up for another higher high in the 91-94 congestion zone.  At that time the chart will have to be reassessed.  The weekly chart wants to see a test of the 78-ish in the future so this must be kept in mind. The daily chart above wants another price high, then perhaps price may roll over again, that is why a couple weeks of action will be needed then a reassessment.

The 100 price is probably a long ways off in the future as deflationary forces continue to take hold, probably for many weeks to come. China easing will likely help complete the needs of the daily chart over the short term. Another wild card is trouble in the Middle East which could add an immediate premium into oil again. Projection is a move down to 87-88-ish, then back up for a higher high in the 91-94 zone, then perhaps roll over, but a reassessment of the chart will be needed at that time. 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.

Note Added 7/19/12 at 8:41 AM: The Syria civil war situation is reaching a peak so the Middle East premium is moving back into oil.  WTIC closed at 92.63 today jumping into the 91-94 zone without a pull back. The analysis above holds. WTIC should pull back to the 84-87 area, then travel back up for another higher high at 93-94, perhaps higher. If the Syria situation gets out of hand, then the oil premium will keep driving price higher. The 200-day MA is 96.29. Higher targets in this short term time frame are now in play due to the strong three percent plus move today due to Middle East turmoil.