Mad Money

Cramer: Why charts see $70 oil in our future

Cramer: Why charts see $70 oil in our future

With oil's third-quarter roller coaster ride, Jim Cramer turned to the charts to find out where it could be headed.

"Remember, I think the rebound in oil from its late August lows has been a major driver in the epic rally in our stock market, so it's imperative that we get a sense of where oil is going, particularly in the wake of yesterday's nasty pullback," the "Mad Money" host said.

So, Cramer turned to two technicians to read the charts and put the oil market into perspective. The first was Carley Garner, a technician and expert on commodities who is the co-founder of DeCarley Trading and colleague of Cramer's at

At the moment, Garner is hearing bearish chatter about oil all over the place. But in her perspective, the things the bears are focused on aren't exactly a surprise. Thus, the bearish view in oil is pretty much baked in, so the path of least resistance for crude is likely to be higher.

Either way, the oil situation is a lot less worrisome than many people would have you believe
Jim Cramer

Garner's perspective was confirmed when she looked at the weekly chart of West Texas Intermediate crude, in addition to the Commodity Futures Trading Commission's weekly commitment of traders report, which tells investors how the major players are betting in the oil futures market.

When Garner looked at the report, she found that that the commitment of traders numbers don't paint a picture in either direction. This neutrality could suggest that big money is resisting the bearish thesis. Additionally when she looked at the weekly chart of the price of crude, she found that if oil can break above $50, it will be breaking the negative trend that has dominated in the past year. That could lead to a huge rally. However, if it doesn't break the $50 ceiling that could mean it will pull back to the $40 level.

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Next up, Cramer spoke with Carolyn Boroden, a technician who runs and is also a colleague of Cramer's at Boroden believes that the lows of oil back on Aug. 24 were extremely important and could represent a real bottom.

In the long-term, Boroden thinks that if the August low holds, then oil will work its way back up to $70 or even $80. The key to this is that it will eventually work in that direction, because in the near term, Boroden thinks it could be time to be more cautious.

Ultimately, both chartists think that oil is headed higher. So, while Boroden says oil might need to pull back before moving forward, they both agreed black gold could have sunnier days ahead.

"Either way, the oil situation is a lot less worrisome than many people would have you believe," Cramer said.