A breakout from a well-developed Channel Down chart pattern in NYMEX Heating Oil futures paints a bullish picture to begin the trading year ahead. Autochartist has been tracking this development on the emerging patterns platform, with Friday's breakout highlighted here on the 240-minute candlestick chart.
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The duration of the Channel Down pattern is quite substantial at 198 bars as measured between the inception point and the breakout. Though the breakout occurred on a low momentum reading, all other internal readings are quite strong. This suggests that follow-through buying to confirm the move is more likely to achieve or eclipse the forecast range.
While a pullback into the channel remains quite possible on a weaker opening, the resistance level will be worth watching for signs of near-term strength or weakness. A sharp decline would only temporarily negate the breakout signal and perhaps set up for a retest of support at the bottom of the channel. Barring that outcome, resumption to the upside should test the projected minimum target of $3.06 per gallon and perhaps rally to the upper end near $3.22 per gallon. This would imply a new leg of the long term bull market is under way.
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