Oil May Surge to $120 a Barrel After Breaching $103: Technical Analysis
Oil is poised to test prices above $120 a barrel for the first time since September 2008 after breaching a target near $103 a barrel, according to technical analysis from Citi FX.
Oil faces resistance above $120 a barrel, the 76.4 percent retracement level on a linear-chart Fibonacci study of oil’s 2008 collapse, said Tom Fitzpatrick, chief technical analyst at Citi FX, part of Citigroup Capital Markets in New York. Crude fell from a record $147.27 in July 2008 to $32.40 that December.
Crude oil for April delivery rose $2.51, or 2.5 percent, on March 4 to $104.42 a barrel, surging past resistance at about $103.25, the 76.4 percent retracement level in a log-chart Fibonacci study of the 2008 collapse. The settlement price was the highest since Sept. 26, 2008. Prices gained 6.7 percent last week and have advanced 30 percent in the past year.
“If there are big differences between a log and a linear chart on a target, we take the more conservative approach, but if that gets breached, we look at the more aggressive one, which is just over $120,” Fitzpatrick said in an interview. “Between here and $120, there wasn’t a single level. We went up in a straight line in 2008.”
If oil fails to sustain the move higher, it has support between $90.50 and $93 a barrel, levels crude tested twice before breaking through them in the most recent rally, he said.
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