NEW YORK ( www.TheGoldAndOilGuy.com) -- Crude oil has been trading the past year between the 2011 high and low. That trading range has been contracting, with a series of lower highs and higher lows in 2012. Because it is taking place after an uptrend, this pennant formation is a bullish pattern, with a chance of seeing $110 and possibly even $140+ per barrel in the next 6-18 months.
If you look at the weekly investing chart of crude oil, the key support and resistance levels are clearly marked. A breakout of the white pennant will trigger a move to the next support or resistance level. And judging from the positive economic numbers, not only from the USA but globally, the odds are increased for the $110+ price target to be reached sooner than later.
Crude Oil Price Chart: Weekly Investing
Crude Oil Price Chart: Daily Short-Term Analysis & Target
If we zoom into the daily chart and analyze price and volume, you will notice the $100 per barrel level is potentially only 2-3 days way. Keep in mind that whole numbers (decade and century numbers) naturally act as support and resistance levels. So when the $100 century price is reached, there will be a wave of sellers with fat thumbs who will slam the price back down to the $96 and possibly back down to the $92 level before oil continues higher.
Utility Stocks, XLU: Weekly Investing Chart
The utility sector has done well and continues to look very bullish for 2013. This high-dividend paying sector is liked by many and the price action speaks for itself. Keep in mind you can view my actual watchlist of the stock and ETFs I trade
in real-time with my analysis, for free
Energy Sector: Weekly Investing Chart
Energy stocks, which can be followed using the XLE exchange-traded fund, typically lead the price of oil. Looking at energy stocks, we can see that they are outperforming the price of crude oil and on the verge of breaking out of a large cup & handle pattern. If so, then $90 is the next stop, but prices may go much higher in the long run.
Energy Stocks and Crude Oil Conclusion
: In short, crude oil is stuck in a large trading range much like gold and silver, which I just wrote about here:
Precious Metals & Miners Making Waves and New Trends
Once a breakout takes place on either the white or yellow lines on the first crude oil weekly chart, we should see oil, energy and utility stocks start making some big moves. Depending on the direction of the breakout (up or down), it must be played in that direction to generate substantial profits, obviously.
Get my daily analysis, updates and trade alerts here:
At the time of publication, the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.