Brent Crude Oil has fallen quite far from its yearly high of $135. That was almost two months ago. Ever since the price crashed down to $100 in less than two weeks from the high, the price has been swinging very nicely between Fibonacci levels. I had done some analysis of that in a previous post. However, today I will be analysing two chart patterns that have formed. The first that has already broken out is a flag. This is a specific chart pattern that forms after there has been a quick steep price rise (pole) and then a consolidation period (flag). The second is a descending broadening wedge.
Ideally from my learning, you want the flag patterns and any chart patterns to be on the daily timeframe. That is how I learnt it, I have had some success trading chart patterns on a short timeframe and I have largely seen other people do the same. However, I don’t know if this is just luck or actual trading. So, I will still use them just for educational purposes so that you may know what would be the case if it was on the daily or weekly frame.
The flag pattern has already broken out so there’s no point in analysing it apart from getting a price target:
Difference between bottom of pole ($99.938) to the top ($107.086) = $7.148 * 0.46 (percentage meeting price target) = $3.28
Add that to the bottom of the flag ($106.003) = $109.29.
The Flag pattern has already broken out and reached its price target. So the main focus will be the Descending Broadening Wedge.
Breakeven Failure Rate for upward breakouts: 18%
Average Rise: 32%
Throwback Rate: 62%
The bottom of the pattern has found support at the 0.62 Fibonacci level. The price, ideally, should touch (not cut) the trendlines five or more times. A good split between the two trendiness. That isn’t really the case here. However, the volume has been trending upwards. This is of course ideal. The price target for this pattern is quite simple for upward breakouts, it's just the peak. So that would be $110.632. This trade may be a quick one, however. The pattern has formed between two Fibonacci levels so the price may rebound once it hits the upper level. Also, as you can see from the Stochastic RSI (upper Indicator on the bottom) a bullish cross over has emerged. Also, the MACD (lower indicator on the bottom) could possibly be closing in on a bullish cross over.
Well, this is a bit embarrassing because by the time I finished my analysis the pattern broke out and reached its price target haha.
Ideally from my learning, you want the flag patterns and any chart patterns to be on the daily timeframe. That is how I learnt it, I have had some success trading chart patterns on a short timeframe and I have largely seen other people do the same. However, I don’t know if this is just luck or actual trading. So, I will still use them just for educational purposes so that you may know what would be the case if it was on the daily or weekly frame.
The flag pattern has already broken out so there’s no point in analysing it apart from getting a price target:
Difference between bottom of pole ($99.938) to the top ($107.086) = $7.148 * 0.46 (percentage meeting price target) = $3.28
Add that to the bottom of the flag ($106.003) = $109.29.
The Flag pattern has already broken out and reached its price target. So the main focus will be the Descending Broadening Wedge.
Breakeven Failure Rate for upward breakouts: 18%
Average Rise: 32%
Throwback Rate: 62%
The bottom of the pattern has found support at the 0.62 Fibonacci level. The price, ideally, should touch (not cut) the trendlines five or more times. A good split between the two trendiness. That isn’t really the case here. However, the volume has been trending upwards. This is of course ideal. The price target for this pattern is quite simple for upward breakouts, it's just the peak. So that would be $110.632. This trade may be a quick one, however. The pattern has formed between two Fibonacci levels so the price may rebound once it hits the upper level. Also, as you can see from the Stochastic RSI (upper Indicator on the bottom) a bullish cross over has emerged. Also, the MACD (lower indicator on the bottom) could possibly be closing in on a bullish cross over.
Well, this is a bit embarrassing because by the time I finished my analysis the pattern broke out and reached its price target haha.