Reversing formation in the oil prices: head & shoulders

This graph shows that the price of crude oil could increase up to 75$, but first it would have to test the breach at levels around 39$.

Craig Johnson, senior technical market strategist at Piper Jaffray, sees crude prices going as high as $75 per barrel in about a year based on a long-term chart of oil.

The graph shows formation head and shoulders, a pattern that is generally thought to predict an uptrend. This, coupled with crude breaking above a diagonal neckline, makes Johnson bullish on oil.

"I think you got $2 to $3 on the downside back to about $40," he said. "But the last time I saw a setup like this was the bottom of the market at about 2008, 2009 on the S&P 500. That was a nine-month setup, and standing that measured objective up led to a very nice return in the markets."

"Looking at this price objective [that's] standing it up, you could be between $70 to $75 in oil in about 12 months, based upon the top-line break in that neckline here," Johnson said.

But trade carefully, as analysts from Morgan Stanley warn, that the price of crude oil could drop to 35$ per barrel.