Oil markets have been absolutely brutalized lately, as it wasn’t until recently that we even saw any signs of hope for the buyers. The WTI market had fallen as low as $46 at one point, but now looks as if it has formed some type of major bottom. Normally, I would attach a daily chart to this article, but in this specific case I wanted to attach a weekly chart because I think its showing something major now.
The $60 level which is just above the close of the June 2015 contract is a major resistance barrier. However, we are most certainly pressing up against that area, and it now appears that we are about to break out. In fact, one of the most classic bottom reversal signs in technical analysis has now formed. It is the “W” pattern that you see at the bottom of the chart. It’s essentially a double bottom, but once you break above the beginning of the “W”, it becomes confirmed as a reversal.
$60 is vital
If we break above $60, I feel that we go directly to $66. I also think this is exactly what is about to happen. Part of the reason I feel like that is that the previous week’s candle was a hammer. While breaking the bottom of that hammer would be a very bearish sign as it would become a “hanging man”, the exact opposite can be true and I believe this just shows how much resilience is underneath this market. At this point in time, it will take a significant collapse during the session today to have this market look like it’s ready to reverse.
My analysis of this is not something that can be taken in one session. Quite frankly, it has to be thought of as a longer-term potential “buy-and-hold signal.” I think that if we break out we will head directly to $66, and then to $70. Above there, this market will probably go as high as $85 given enough time. This is a market that was oversold, and that’s about to be corrected.
