The chart below came my way this weekend and it paints a pretty bullish picture (Zak Mir will be pleased to hear given his blog here – http://www.spreadbetmagazine.com/blog/zak-mir-on-the-two-crudes-wti-brent.html
What we can see is a large pennant formation that has been 5 years in the making and that broke to the upside in July. The decision point at the apex of a pennant is always pretty important. Should the centre line of the apex fail to hold, this would be considered a continuation pattern lower.
We can also see he cycle arcs at the bottom of the chart have a pretty good track record for lows at this time of year and the acceleration out of the time frame.
Take a look at the zoomed in view (a three year weekly view) of the same chart above. Pretty interesting price action is revealed from previous occasions. The RSI found support at the 40 which is where a bull trend that is in place usually finds support. The CMF money flow has also gone positive this week.
You’ll also notice that the price briefly broke below both trend lines and found support. That is a very strong bull signal – it tested below and then got aggressively bought.
Now take a look at the weekly chart on a 7 year view.
It is common to find price break out of a pattern and then go back and back-test the trend line. When it does, that is usually an excellent entry. So here we now sit just below the 10 WMA and 40 WMA. On the daily this looks quite bearish. It is a lesson that when looking for the bigger picture.
As with a resumption in the gold bull trend after 2 years of pain, our money’s on oil and the entire commodities spectrum returning to favour during 2014 on yet more money printing that finally ignites wider inflation…