Hello and welcome back to CantosCharts. I'm David Jones from spread betting company IG Index and today we're going to look at the price of crude oil.

As I'm sure you're aware we have finally, in the last week or so, seen crude oil break out to fresh recovery highs. For much of the last few months, even though the year started positively with a move by crude out to fresh recovery highs off these February 2009 lows, we had seen crude oil whenever it rallied up to $82, $84 the sellers would come back out. So it was continually getting battered back up at these levels, but it has all changed in the last week. We've seen it break through $84, which does suggest that the next leg of the recovery is underway. But we'll have a look at this in a bit more detail in a second.

Until this happened it did look like potentially we were going to have some sort of head and shoulders forming in crude oil. But, of course, that would only be valid if we broke below $70. The fact that crude has gone through the old highs makes any potential head and shoulders null and void.

What I thought we'd look at though before we get into looking at where the price may go from here is looking at how the trend has fared since Feb last year and again for me, this high - I'm quite a sceptical technical analyst and I think you have to have a dose of realism when it comes to market analysis and risking your money.

But I think it shows from early last year we saw various trends in crude oil. We had these trend lines that will break, which again some people would see as maybe the end of the recovery but it just goes to show we've had various trend lines break on the way up but the market, the price of crude oil, has carried on rising.

So I think it does show that just because a trend line breaks doesn't necessarily mean that that trend is over and the market is going to reverse. It just may mean, as we've seen here with crude oil, that the price is going to carry on going up, or down if it is a downtrend, but it maybe something of a more relaxed rate and that's definitely what we've seen with crude over the last few months up until last week.

So we've broken out now finally through this $84, $86 a barrel mark and we can see, looking at the RSI, we are quite overbought down here and crude oil is a volatile market at the best of times.

So just because we're currently trading at about $86 a barrel doesn't mean that suddenly we're going to go up every day for the next three months. We have to be aware of the odd pull backs along the way.

But again, if we're looking at targets, some people will look at breakouts like this and use a technique known as projections. So they'll look at the range that the market was trading in before and project that move up to give us the next target for crude. This personally ties in with my own target for crude at the moment where if we look at the previous range, it was roughly trading from about $69 to $84. So we had a $15 range. It has broken through $84, so the projection is a $15 move on top of that which gives us, rounding it up, $100 a barrel does seem to be the next logical medium-term target for the price of oil.

But let's just jump forward again and look at maybe the shorter term charts because again, to highlight levels where we're going to change our minds.

Think, right, I want to be a buyer of crude oil. I think it is going to $100 a barrel, but as we know, things don't always work out as we think they're going to, so we're going so we need to have some levels in mind where if the market breaks back below here, then maybe we need to be sidelined for a little bit. For me, I'll just be looking at the levels, the support levels that provided a base whenever we would see sell offs from $84 recently.

So again for me, it's running from around about $77 the lows at the end of February and then during March we saw it drift back to about $79. Whenever we saw weakness below $80 we would see the buyers come back in fairly sharply.

So I think for crude oil, we've got this band again running from about $77 to $79. We may well see weakness from where we are back to there because again in the great scheme of things it is only a $10 or so fall for the price of crude which is not really that major. So it will be mostly weakness back to this area.

But again, as long as these levels hold, for me, the bullish story stays intact for a run back up to $100 at some point this year over the next maybe three to six months or so.

Again on the RSI on the short-term chart we are looking very overbought down here, so it would not be surprising in the next couple of days or so to see a bit of weakness for the price of crude oil. It has rallied about $7 just in the last two or three days, so we should be aware of that that the RSI is overbought.

But again, as I say, any weakness from now does look to be a buying opportunity as long as we don't go crashing below these late Feb lows around $77 a barrel.

That's it for me for CantosCharts this week. I hope you found it useful and I look forward to talking to you again in the future.