Technicals | Apr 19 2012
By Robert Clayton
West Texas Intermediate Crude Oil: last US$104.26/bbl. Please refer to the following chart:
Technical analysis identifies significant trending features and in this case the two recorded "bullish outside range" days. One printed in October 2011, the other in February 2012. Since October 2011 crude oil (WTI) has had a tremendous run and still has plenty left to run according to the bullish two signals. Many are looking for reasons why crude oil has continued to rally. Technically, there is one main reason: the bullish outside range confirmation.
As it doesn’t look like this will subside anytime soon, the conclusion is that crude has plenty of room to run to the immediate target of US$105.50/barrel, then US$110.00/barrel. The journey’s end may hold to US$122.00/barrel.
The uptrend in crude oil appears to have started from the retreat from US$113.75/barrel back in April 2011 and rebound in October 2011 from US$76.50/barrel. Overall, crude could fall to US$97.00/barrel and still remain consistent with the long-term uptrend. A breakout above US$105.50/barrel has a technical upside target near US$110.00-50/barrel. In the short term the crude oil price may consolidate above US$101.50/barrel with US$97.00/barrel firm.
Overall, the longer term pressure to the upside will be consistent. The move towards the resistance target near US$112.00/barrel may be slower in coming weeks but the upward pressure should remain strong. The extension of the trend may end in a ‘parabolic rally’ following a successful breakout above US$112.00/barrel, targeting the US$116.00/$122.00/barrel window.
Rob Clayton has for five years produced technical analysis independently through his company ‘Robert Clayton Global Markets’ having for twelve years prior held the role of senior technical analyst at Westpac Banking Corporation’s Institutional Banking Division. He is now part of the team at GTL Capital Management. Rob’s reports are offered to institutional and professional trading clients in Australia, Asia, the Middle East and Europe.
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