An oil pennant pattern could lead to a large base
A rally to $57.00 would break the neckline at $52.00 of the still developing head and shoulders base. The base is forming the right shoulder and a broken neckline would project oil prices to the May 2015 highs of nearly $63.00/brl (a 61.8% target).
Oil seasonal headwinds - trend is choppy and weak in Q4
Chart 2 shows oil prices tend to decline on average in Q4 during the last 5, 10 and 30 years. In December they tend to find a bottom. This period takes into account the large decline in oil prices in 2008 and 2014. However further study of Chart 3 shows most Q4 periods are sideways to lower periods.
We see support levels at 44.50, 43.35 and resistance levels at $50.00 and 51.80.
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