Goldman Sachs has recently called for the value of crude oil to increase to roughly $65 per barrel as we head into 2021, and the latest charts appear to echo this sentiment of a global rebalancing in this market. Naturally, much of these moves rely on the promise of a Covid vaccine and some seasonal cues. In today’s Chart of The Day, we use the point and figure method to help uncover potential supply and demand areas and see where price action may occur.
The chart above highlights the bullish support line currently at the forefront of oil moves. Since the low of zero, the price has incrementally risen, generating a steady accumulation period before the latest bullish breakout above $43.00. This breakout also forms part of a bullish flag formation that suggests additional moves to the upside in the coming months.
Using a point a figure calculation to locate a potential upside target, we find a vertical count from the $1.00 low provides us with $59.00 as a possible destination for the commodity. Not too far off from what analysts over at Goldman are presenting.
It appears many analysts are calling for oil to return to pre-covid prices as we expect increased demand once both a vaccine becomes readily available winter months in the northern hemisphere typically drive energy markets to higher levels. Of course, there are no guarantees that either of these scenarios will occur or that demand follows historical trends for this time of year.
For the time being, global oil prices remain stable, with bullish sentiment continuing to trickle through into many of the technical indicators.
Note: Click on charts to enlarge.
Sources: Go Markets, MetaTrader, TradingView, Bloomberg
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