Heating Oil futures followed the energy complex lower in Friday's volatile session, setting up a textbook pattern breakout. The push lower in the Heating Oil violated the key support provided by a major Rising Wedge chart pattern which began developing in early October. Follow-through to lower levels in the week ahead may signal the end of the latest rally with a big correction on the horizon.
The Rising Wedge pattern has been this market's definitive guideline throughout the entire rally from the lows near $2.70 per ounce. This pattern scores high marks across the board, with an overall Quality of 8 bars. While the momentum associated with the breakout shows a modest 3-bar reading, the prolonged duration of the pattern over both price and time increases the potential for a follow-through move towards the forecast range.

The projected price target for this move calls for a minimum retracement to the $2.93 per gallon level. An increase in momentum could trigger an accelerated decline, taking the price as low as $2.70 per gallon. This would represent a 100% retracement of the 6-week uptrend and call into question the potential for Heating Oil to make new highs again during the winter season.
For further information on this and other Autochartist products, visit our website at www.autochartist.com