Oil trading on two major resistances. Breakout possibly leading to key buy signal

An interesting battle is currently happening with oil. Its first two days of the new year were really negative and the price pretty much collapsed, erasing the gains from the second half of December. Buyers managed to stop the decline and performed a counterattack seen now on the chart, which can actually be a start of a proper, mid-term bullish wave.

This drop and rise from January actually formed a right shoulder of the big Inverse Head and Shoulders pattern (orange). This is a bullish formation that usually starts a new upswing. One thing is missing here for the technical buy signal – the breakout of the neckline (black). Interestingly enough, the neckline is currently in the same place as the long-term down trendline (red) connecting lower highs since the middle of June. Thus, we do have two strong resistances in one place waiting for either a breakout or a bounce.

Price bouncing off those two will be an invitation to go short and price breaking above them and closing a day somewhere above 80 USD/bbl. will be a proper signal to go long. Should that not suffice, one may wait for the breakout of the horizontal resistance on the 83 USD/bbl. (yellow) that has also been high since December. A price closing above that one would be a legitimate confirmation of a new bullish sentiment.