Light sweet crude oil – Bullish short-term reversal pattern
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.