The outlook for oil prices remains bullish, both on the chart and in the economy.
World economies still run on oil. The U.S. economy may run on domestic shale oil, but China remains dependent upon imported oil.
West Texas oil sets the benchmark. The outlook for oil remains bullish, the chart confirmed with the reaction rally from near $38 and the retest of historical resistance near $48.
Three features have helped confirm the bullish outlook on the chart: the Guppy Multiple Moving Average relationships, the confirmed chart pattern and the history of support and resistance trading bands.
The first feature is the GMMA relationships, which are showing a classic breakout pattern.
The GMMA pattern of trend breakout consists of three parts: First is a rally that tests the value of the lower edge of the long term GMMA. This happened in June of 2015. The second part is a breakout above the upper edge of the long term GMMA. This developed in June of this year. The third part is a retest of the support levels followed by a rebound.
The short-term GMMA briefly dipped below the value of the long term GMMA. However, the price rebounded rapidly from the historical support level near $38. This behaviour confirmed the classic GMMA trend breakout pattern.