Expect Crude Oil prices to firm up after it completed an 8 week bullish Flag pattern. Prices had been retracing in a counter-trend rally for the last 2 months and now look set to resume the inter-mediate term uptrend after the Flag pattern completion. The upwards sloping blue colored trend-line was tested but held firm. Price broke above the upper line of the flag and also took out the short term resistance at 105 (see green colored horizontal line).
Flags are short term continuation patterns that form during the course of a consolidation before the previous move resumes. Also note that a previous bullish flag on crude oil went on to meet it's
measured objective. The measured price implications for the pattern suggest a potential target of 111.80 to 112. One can expect 105 to be a short term support level going forward. The bullish pattern will be invalidated if the price was to dip below 105.I regularly track charts like crude oil and gold because they have implications for the equity markets. For example in recent times crude oil had a rather positive correlation with the S&P 500. And right on cue the S&P 500 is trading with decent gains today. Rising crude oil prices are synonymous with rising cost of goods but another perspective to look at firming crude prices, especially in the current scheme of things is a possible strengthening in demand.
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