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Technical analysis for crude: The right shoulder is under preparation!
Written by article default Friday, 26 November 2010 11:06
We will study the daily chart for crude today from a pure classical point of view, and we will see how it is on its way to form a common and reliable reversal pattern.Actually, we are facing a case of forming the right shoulder of a head and shoulders top pattern. The provided daily chart shows the probability that crude already placed the left shoulder and the head.
We should note that this pattern is still under preparation and it is not completed yet, as it should breach the neckline to activate the sell signal.
Thereby, we have to observe the daily chart of crude oil until it provides a daily closing below the pivotal support levels at 80.50, which acts the role of the neckline for our suggested bearish classical pattern.
If that breakout occurred, we will make sure that oil becomes stable below SMA 50 and for sure we will get better sign on Stochastic and the way will be clear towards the technical objective of this pattern.
What is the technical target for head and shoulders patterns?
The technical target is the same distance since the breakout of the neckline as it is from the tip of the head to the neckline. Consequently we will eye 80.50 zones to make sure that the pattern is correct, while the target resides at 72.00 areas.