The NYMEX oil price breakout above $66 comes as no surprise to traders who analyze the price charts.
This price behavior sets the next price target near $76 and potentially higher. Readers will remember that we set $65 and $76 targets in oil notes in 2018 February. These conclusions are derived from analysis of the price chart.
There are three factors to consider in this analysis.
The first factor is the way the weekly chart shows that oil trades in bands. The standout feature on the chart is the strong support level near $43 and resistance near $54. Starting April 2016, the oil price has stayed above this support level and moved in a prolonged sideways pattern.
Support near $43 and resistance near $54 makes the trading band around $11 wide. The breakout above $65 gives the upside projection target for the trading band near $76.
The second factor is the change in the Guppy Multiple Moving Average (GMMA) indicator. The long-term group of averages is well separated and this shows strong and consistent investor support for a rising trend. The degree of separation between the long-term and short-term GMMA is also steady. This again confirms trend strength and stability.
This is not an erratic breakout trend driven by reactions to global risk factors. This is a steady, sustainable uptrend breakout.