Oil May Rally $3 on Close Above 50-Day Mean: Technical Analysis

By Grant Smith

Feb. 25 (Bloomberg) -- Crude oil may rally more than $3 a barrel if it closes above its 50-day moving average of $40.25 in New York today, according to technical analysis by consultant PetroMatrix GmbH.

Crude may climb to toward its higher Bollinger band at $43.80 a barrel, PetroMatrix founder Oliver Jakob said in a report e-mailed from Zug, Switzerland today.

Bollinger bands, a technique developed by analyst John Bollinger in the 1980s, use historical volatility to set upper and lower targets either side of the moving average price of a commodity, currency or security.

The chart shows the 50-day moving average for crude on the New York Mercantile Exchange with oil’s upper and lower Bollinger bands. Front-month futures last settled above their 50-day average on Jan. 26.

Oil for April delivery gained as much as 90 cents, or 2.3 percent, to $40.86 a barrel, on the New York Mercantile Exchange. It traded at $40.35 at 12:15 p.m. London time.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net