Oh yes - the potential for the current rally in oil

Ray Merriman commented on oil in his weekly update, and here's my chart for assessing the rally that's begun in oil (prior posts describing it are under the "Oil" label). It's true that I've come to the belief that oil cannot look forward to new highs and therefore any moves up will be corrective - unless oil proves otherwise, but I'm not seeing it yet. Main thing I'd wish for now is bigger volume with the move up. Still, an interesting article - Contango Quickly Disappearing: Backwardation and USO Profits Next? by Tyler Durden and posted at Seeking Alpha - is evidence that others are seeing this. I'm certainly in and willing to play along. I'd just like to see it move decisively up to the third horizontal green resistance level I had marked, and then we should have a good idea based on pattern and technicals to figure out its chances for testing the Fibonacci retrace levels (I know Merriman mentioned either a brief but weak rally, or it gets to about $60 in oil (not the ETF, USO, but crude oil). This chart looks consistent with that assessment: