Oil has enjoyed a nice run up since early February, with the majority of its gain in May. But after climbing above $70 oil has taken a rest and has formed a
Broadening Top Candlestick Pattern.
If there was to be a break out of the top of the pattern, it could send oil to $74-$75. But the chart pattern favors a drop in price. This is drop is also supported by the indicators, the Stoch has crossed and given a sell signal and is working off its overbought condition. MACD's histogram turned negative on Friday. But because of the events in Iran, there could be a rise in oil on Monday. Although post-elections events in Iran did not send oil prices up, so this might not affected the price of oil. CNBC notes that oil trades are watchin the
dollar instead.
Looking at the dollar it looks as it consolidated at these levels and is in a uptrend since the high 70's. The price action makes a ascending triangle. A break of 81 would be very bullish for the dollar and negative for oil. But if the short-term trendline is broke it could send the dollar back down to 79.
