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Oil Price Action A Bullish Signal

Technicals | Mar 17 2011

– Oil prices returning to previous breakout levels
– Momentum approaching oversold levels
– Technical analysts at Barclays turning more positive


By Chris Shaw

Oil prices are returning to breakout levels of US$94/95 for West Texas Intermediate and US$103.35/$105.60 for Brent Crude. This price action is seeing the technical analysts at Barclays Capital turn more bullish.

As the analysts note, momentum is quickly approaching oversold levels, a complete reversal of the overbought signals being displayed a week ago.

In the view of the technical analysts Brent crude appears to be forming a flag-like pattern. This suggests if the uptrend of the past 10 months is to continue, fresh demand should be located around these levels.

A break above former range lows around US$112.40 would suggest a re-test of US$116.50 according to the analysts, though the preference is for gains above US$118.50 as this would confirm an extension through previous highs of US$119.79.

Medium-term the technical analysts at Barclays remain bullish for a move towards US$122 per barrel for Brent crude.

Technical limitations

If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

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