Oil just posted its longest winning streak since April 2015, surging nearly 20 percent in the last six sessions. But if you missed out on the recent rally, one technician says there are many more gains to be had.
"Now is the time to be playing for a breakout," said Oppenheimer's head of technical analysis. "We think oil moves above this important threshold and looking out into 2017 we see WTI at $63 a barrel." That's 30 percent higher than where the commodity is currently trading.
By Wald's chart work, there are two main reasons to be bullish on crude right now: a key reversal in trend and weakness in the U.S. dollar index.
"The dynamics of the trend really changed in April when WTI moved above its 200-day moving average and broke its two-year decline," said Wald. Furthermore, he noted that after its high in June, oil sold off more than 20 percent below its key moving average only to bottom out in early August and take back most of the losses. "We saw a very strong reversal there and now we are seeing some continuation of that."
Meanwhile, the U.S. dollar index has fallen to its lowest level since late June, giving Wald even more conviction that crude is going higher.
"Due to the inverse correlation between crude and the dollar, we think that provides another tail wind for oil," added Wald.