After recent extremes, expect crude oil to slide into a more stable trading range, says Al Brooks.
The crude oil futures market broke above the neckline of a small double bottom last week (see chart). It will probably test $60 and then enter a trading range between $50 and &60 for a couple months.
Crude oil futures rallied strongly last week. For the past three weeks, I have been saying that either the low of the next couple months was in or there would be one more brief push down and then a reversal up.
Furthermore, the first target is the top of the most recent sell climax. That is the May 30 high just below $60. Also, the daily chart might enter a two-month trading range.
Finally, I have been saying since November that crude oil had a Big Up, Big Down pattern and that creates big confusion. I therefore said it will probably be in a trading range for the rest of the year.
This week broke above the June 10 high around $55. That is the neckline of the June 6/June 12 double bottom. A measured move up would be around $60.
After a breakout, there is often a pullback. Consequently, the daily chart might sell down the June 10 high within a week or two. Even if it does, the odds still favor a test of $60 within a few weeks.
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