Oil prices pivoted off of key support at 87.25-86.80 last Friday in the aftermath of a decline from 92.58. Strength yesterday and today has the look and feel of a new upleg, which if accurate projects next to 94.60-95.20 -- and, if that target zone is breached, onwards to 103-105.

At this juncture, only a sudden downside reversal that breaks 87.25 will disrupt higher projections.

The move has benefited the US Oil Fund ETF (USO), as well as Petroleo Brasileiro (PBR), which we've been following. The daily chart on PBR shows the recent pullback from the Jan 3 high at 38.25 to the Jan 10 low at 35.89, which has the right look of a completed correction. Given today's strength, the chart has the look of a new upleg that should take out the prior high at 38.25 en route to still higher near-term target zones.

By Mike Paulenoff

Mike Paulenoff is author of MPTrader.com (www.mptrader.com), a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.

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