Oil prices are on the rise as tensions mount in Iraq. Instability in the region and the recent occupation of key oil fields by the group known as the Islamic State of Iraq and Greater Syria (ISIS) has caused supply fears. Only time will tell how this story will play out, but until some sort of resolution, it wouldn’t be surprising to see the price of petroleum head even higher.

Meanwhile, the price of West Texas Intermediate Crude Oil recently broke out of an ascending triangle pattern on high volume. This technical buy signal is used by active traders to suggest that the price is poised to make a move higher. Target prices are usually set equal to the height of the pattern, which in this case suggests that prices could hit $118.75 over the coming weeks/months. (For related reading, see: Oil And Gas Industry Primer)

A Look At The OIL ETF

Traders seeking to increase exposure to oil may want to turn to the iPath G&P GSCI Crude Oil Total Return Index ETF (OIL). This fund seeks to replicate the returns that are potentially available through an unleveraged investment in West Texas Intermediate crude oil futures contracts. As you can see from the chart below, the price has recently broken above the resistance of an ascending triangle, and the bullish crossover on indicators such as the RSI, MACD and fast stochastics suggest that upward momentum will persist. (For more on this topic, see: Bullish And Bearish MACD Crossovers)

Active traders will likely look to set their stop-loss orders below the support of the nearby 200-day moving average of $23.66. Unless the situation in Iraq calms down, it's not unreasonable to suggest that the price of the OIL ETF will hit $30 before it falls below the 200-day moving average. (For related reading, see: Why Rising Oil Prices Are Bad For The Economy)

Exxon is Suggesting Oil Related Assets Are About To Move Higher

When it comes to analyzing oil-related assets, a good benchmark is Exxon Mobil Corp. (XOM). Exxon is the 800-pound gorilla in the energy space, and the recent bounces off its 50-day moving average (shown by the blue arrows) suggest that upward momentum is likely to persist. The recent support near the $100 level will likely be used by retail investors as an ideal entry point. It wouldn’t be surprising to see the price of Exxon move above its recent swing high of $102.75 and head substantially higher. The recent bullish crossover of the MACD and its signal line confirms this analysis and could be used to suggest that now is the ideal time for bullish traders to take a position. From a risk/reward perspective, it would be prudent to protect losses by placing a stop-loss order below the 50-day moving average. Longer-term traders may even want to set their stops below the 200-day moving average, which is currently at $93.76. (For more on this topic, see: Moving Averages Tutorial)

The Bottom Line

Violence in Iraq isn't the only factor pointing to a rise in the price of oil. Bullish chart patterns are also suggesting that oil prices should head higher over the coming weeks and months. The recent break above resistance could be just the beginning of a short-term move higher. Accordingly, now could prove to be an ideal time for risk-tolerant traders to take a position. (For further reading, see: What Determines Oil Prices)

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