Commodities Corner
Let’s take a look at the Oil price this month given the continued interest in this instrument by many spreadbettors. Below is a chart on the front month Nymex oil contract over the last 5 years and which shows a very large and clear pennant formation that has been in the making during this period.
It can be seen that the front month oil contract is now sat just below the support line from early 2009. If this is a true trend line break, then the height of the pennant is some $40 - projecting this down would result in a potential medium term price projection of $40.
Nymex Light crude daily chart From hitting a recent low of $77 a barrel 2 weeks ago, a nice reversal pattern was put in place on the weekly chart after a 2nd revisit of the $77 price level and then a close towards the highs for that week (w/e 13 July).
102 www.financial-spread-betting.com | July 2012
This tempers any bearish stance in the short term and in particular when combining this with the stochastics set up (circled) that has had a good record of predicting up moves during the last 5 years - certainly when the slow line is below the 20 line and begins rising from this point, as it is now.