Technicals | Oct 07 2010
By Chris Shaw
While oil prices have traded in a relatively wide range in recent months, the technical analysts at Barclays Capital note the price tops have had a consistent signature pattern. The pattern consists of two weekly bar or candle formations that have formed at all the peaks over the past few quarters.
At present the analysts see no such bearish signs, this despite what is expected to be a tougher short-term environment for prices near the summer peak of US$83.90 per barrel. What adds weight to the short-term view prices may struggle is since the US$73.58 low in late September, prices have risen in almost a straight line.
This implies the oil market has been overbought, so the analysts suggest the risk now is with a chart peak at just below US$84.00 per barrel there is scope for bids to stall. This implies a corrective move is possible, though the focus remains on higher prices moving forward.
The analysts suggest the 200-day moving average at US$82.74 per barrel is likely to see some attention, but a move below the intra-day bottom at US$80.76 is needed to damage the current upside potential.
Medium-term the market appears poised to trade higher into the end of the year, the analysts noting the December contract is targeting a range of US$93.00-$95.00 per barrel.
