U.S. markets have been in a sustained uptrend since 2012. The election of President Trump has accelerated this trend in anticipation of a boost to the U.S. economy through proposed infrastructure spending.
But in truth, the U.S. economy has been growing steadily since 2012 although that wasn't enough to support oil prices which collapsed in mid-2014. The oil price did not reflect the U.S. economic expansion in this period. The price developed a recovery in 2016 but will this continue in 2017 or will the oil price fall again?
Chart analysis provides us with a methodology to understand market behaviour and set future targets. Chart analysis identifies trigger points which confirm when the market has taken significant steps towards meeting the new target conditions, or when the conditions have failed.
The long-term outlook for NYMEX oil remains bullish with initial targets at $58 and medium term targets near $68 and $72. These target levels are derived from two sets of chart features. They are: The long-term chart pattern and the history of support and resistance trading bands.
The first feature is the development of an inverted head and shoulder reversal pattern. This is a long-term trend reversal pattern that started in mid-2015 and which was confirmed towards the end of 2016. It is best seen on the weekly price chart.