It appears some of the buying pressure in the crude oil complex has failed to materialize in this week's trading, as the recent surge in both crude oil and the by-products gave slipped back a bit in Monday's trading session. The short term weakness has triggered a technical sell signal in a longer term pattern developing in the Heating Oil futures, seen here on the 240-minute time frame.
This Channel Up chart pattern began at the swing low of the market near $2.57 per gallon, and the market has subsequently rallied more than 20 cents to post highs for the year alongside Crude Oil futures. Friday's soft close followed by Monday's weakness executed a downside breakout at the lower end of the Channel Up, providing a downside price forecast.
If achieved, the projected price target from the breakout points to a minimum level of $2.66 per gallon, with the lower end of the range at $2.60, which would be a near 100% retracement of the recent rally. If achieved this could signal an intermediate term top for Heating Oil, and possibly the entire Crude Oil sector.
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