Crude oil price continues its consolidation above the $40 level, forming a potential bullish triangle. A breakout of its upper edge should lead to a $4 upside move, something that bulls eye since November 11th when the consolidation started.
Weak European Demand Due to Lockdowns
European gasoline and diesel consumption drop to lower levels due to lockdowns and restrictions. While normally, this would weigh on the crude oil price, investors focus on the bigger picture. More precisely, the prospect of an effective COVID-19 vaccine means the end of the lockdowns and the continuation of the economic recovery. Therefore, increased demand for oil products should translate into a higher price.
Crude Oil Technical Analysis
A contracting triangle has five segments: a-b-c-d-e. All of them are corrective, suggesting that the price only consolidates. Because of that, the focus sits to the moment when the triangle ends. More precisely, the moment when the price breaks the b-d trendline.
Bulls wanted to trade such a breakout would like to place a pending buy stop order at $43, a stop at $41.50, and a take profit at the measured move at $48. This way, the risk-reward ratio exceeds the minimum 1:2 level.
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Crude Oil Price Forecast
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