Crude oil has been trading ways for the past year between the 2011
high and low. The trading range through 2012 has been contracting with a
series of lower highs and higher lows. This pennant formation because
it is taking place after an uptrend is a bullish pattern with $110 and
possibly even $140+ per barrel in the next 6-18 months.
If you look at the weekly investing chart of crude oil the key
support and resistance levels area clearly marked. A breakout of the
white pennant will trigger a move to the next support or resistance
level. And judging from the positive economic numbers not only form the
USA but globally the odds are increased for the $110+ price target to be
reached sooner than later.
Crude Oil Price Chart – Weekly Investing
Crude Oil Price Chart – Daily short term Analysis & Target
If we zoom into the daily chart and analyze price and volume you will
notice the $100 per barrel level is potentially only 2-3 days way… But
keep in mind whole numbers (decade & Century Numbers) naturally act
as support and resistance levels. So when the $100 century price is
reached there will be a wave of sellers with fat thumbs who will slam
the price back down to the $96 and possibly back down to the $92 level
before oil continues higher.
Utility Stocks – XLU – Weekly Investing Chart
The utility sector has done well and
continues to look very bullish for 2013. This high dividend paying
sector is liked by many and the price action speaks for its self… Keep
in mind you can view my actual watchlist of stock and ETFs I trade in
real-time with my analysis free: https://stockcharts.com/public/1992897
Energy Sector Weekly Investing Chart
Energy stocks which can be followed using the XLE exchange traded
fund (ETF) typically leads the price of oil. Looking at energy stocks we
can see that they are outperforming the price of crude oil and on the
verge of breaking out of a large Cup & Handle pattern. If so then
$90 is the next stop but prices may go much higher in the long run.
Energy Stocks and Crude Oil Conclusion:
In short, crude oil is stuck in a large trading range much like gold and silver which I just wrote about here: http://www.thegoldandoilguy.com/articles/precious-metals-miners-making-waves-and-new-trends/
Once a breakout takes place on either the white or yellow lines on
the first crude oil weekly chart we should see oil, energy and utility
stocks start making some big moves. Depending on the direction of the
breakout (Up or Down) it must be played in that direction to generate
substantial profits obviously.
Get my daily analysis, updates and trade alerts here: www.TheGoldAndOilGuy.com
01-28-2013 9:18 AM