Crude Oil Price Forecast: Advances Amid Downtrend, Eyes Key Levels

Crude oil rallied to complete a 38.2% Fibonacci retracement today with a high of 76.0. It continues to trade near the highs of the day at the time of this writing and may continue to progress higher. The next higher target is the 50% retracement at 76.87, followed by the 61.8% Fibonacci retracement at 77.84. That higher price level looks interesting as it is close to the 20-Day MA, which is currently at 77.99. Since the 20-Day line has been declining, it may match the 61.8% level by the time crude gets near there. Also, be aware that the 61.8% retracement matches this week’s high at 77.81.

Bouncing Within a Downtrend

Currently, crude is within a downtrend with a larger symmetrical triangle consolidation pattern. It is now retracing its previous decline, but once complete a decline to test this week’s low of 72.73 may occur. Or the lower boundary area of the triangle could yet be tested as support. Potential resistance around the 20-Day MA is the anticipated high of the current bounce. However, resistance could turn crude back down at lower levels as well.

20-Day MA Marks Likely High Target

A daily close above the 20-Day MA would start to improve the near-term outlook in crude. Since it remains in a downtrend the expectation is for a continuation of the downtrend once the current bounce is complete. In addition to the 20-Day MA, the 200-Day MA is at a price of 80.04. It is close to the most recent swing high of 81.0, where resistance was seen. Together, the 200-Day line and swing high identify a potential resistance zone from 80.04 to 81.0.

Week’s Low Hits ABCD Pattern Target Then Bounces

Is there any significance to this week’s low of 72.73? It turns out that 72.56 completes a falling ABCD pattern when utilizing the two most recent downswings. The pattern is marked on the chart. Once price symmetry was matched between AB and CD legs of the pattern, a pivot is identified. The subsequent bullish reaction from that price zone confirms that the market seems to have noticed. It also improves the chance that crude can rally into higher targets before turning back down, if it is to eventually do so.

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