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Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Is Crude Oil Price Breaking Out?

Commodities / Crude Oil Jun 28, 2014 - 09:21 PM GMT

By: Investment_U

Commodities

Christopher Rowe writes: Light sweet crude oil has broken out of an ascending triangle with a minimum price target close to $113.

The ascending triangle is a pattern that’s formed when an investment vehicle (in this case, light sweet crude) makes even highs and higher lows.


In this week’s chart, you can see that light sweet crude actually has an ascending triangle within a larger ascending triangle.

First let’s focus on the smaller one, drawn in black.

Light sweet crude made three even highs around $105 in early March, mid-April and late May. It made two higher lows in mid-March and late April/early May.

This allowed us to draw a horizontal trend line at $105, connecting the even highs, and an ascending trend line, connecting the higher lows.

Once the horizontal trend line was broken, we saw a breakout.

Minimum Price Objective

The best way for a chartist to find the “minimum price objective” is to measure the base of the triangle, which I did using a blue dotted line. Then, that same distance is extended up from the breakout point, which in this case, was close to $105.

Since the distance of the base in the smaller ascending triangle is $7.50, the minimum price objective for light sweet crude oil is around $112.50.

Now let’s focus on the bigger ascending triangle in orange. It began in January at about $92. By March, the price jumped up to the $105 range, which makes the base 13 points wide. That means the minimum price objective is $118, which would be a big jump but not impossible.

For example: Notice the sharp move higher back in July of 2013.

It came after a breakout of an ascending triangle, at $98 (not shown). This triangle had a base that was 14 points wide. That gave light sweet crude a minimum price objective of $112.

While we saw a closing high of only $110.54, it was still a strong move higher.

Technical analysis is an art, not a science. I can’t wait to see how sweet the returns are from crude this year.

Source: http://www.investmentu.com/article/detail/38355/crude-oil-break-out-high

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