Light sweet crude oil – Bullish short-term re­ver­sal pat­tern

Financial Mirror (Cyprus) - - FRONT PAGE -

Trail­ing from the bear­ish move­ment of the Light Sweet Crude Oil, in a Daily chart, from $90 per bar­rel as of Septem­ber 2014, we no­tice the end of this mo­tion in Jan­uary. For­ma­tion of an in­verse Head and Shoul­ders pat­tern oc­curs be­tween the time pe­riod of 29 Jan­uary un­til 7 April. Left shoul­der is formed on 26 Fe­bru­ary with a low price at $47.80, Head for­ma­tion on 18 March with a low price at $42 and the Right shoul­der formed on 1 April with a low price at $47.

Sketch­ing our neck­line we see a pen­e­tra­tion of it and the for­ma­tion of an up­trend from $52.50 on 14 April. This con­firms a bear­ish re­ver­sal trend (up­trend). If the price had started to fall be­low our neck­line then the Head and Shoul­ders pat­tern the­ory would not be valid.

Con­tin­u­ing with our anal­y­sis, we set up our ex­pected tar­gets (1st and 2nd tar­get), which is the ver­ti­cal dis­tance from the head to the neck­line, and con­firm­ing our val­ues with Fi­bonacci’s Anal­y­sis at the strong points of 50% and 61.8%. The price will reach at some point the value of $63 per bar­rel and it is ex­pected to rise to $73 - $75 per bar­rel within the com­ing months.

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