Is Crude Oil About to Breakout?

Focus: COMMODITIES

Geopolitical turmoil, including the recent attach on an Algerian pipeline, hasn’t seemed to affect the price of crude oil much, but Chris Vermeulen of TheGoldAndOilGuy.com thinks that can soon change.

Crude Oil (USO) has been treading water for the past year between the 2011 high and low. The trading range through 2012 has been contracting with a series of lower highs and higher lows. This pennant formation [also known as a sideways narrowing triangle formation], because it is taking place after an uptrend, is a bullish pattern with $110 and possibly even $140+ per barrel in the next 6-18 months.

If you look at the weekly investing chart of crude oil, the key support and resistance levels are clearly marked. A breakout of the white pennant will trigger a move to the next support or resistance level. And judging from the positive economic numbers, not only from the USA but globally, the odds are increased for the $110+ price target to be reached sooner than later.

Crude Oil Price Chart – Weekly

chart
Click to Enlarge

Short Term Analysis & Target
If we zoom into the daily chart and analyze price and volume, you will notice the $100 per barrel level is potentially only two-three days way…. But keep in mind whole numbers (decade and century numbers) naturally act as support and resistance levels.