Crude Oil Price Forecast: Bearish Momentum Builds Amid Correction

Crude oil continued its bearish correction on Thursday, falling to a new retracement low of $70.91. At the time of this writing, it continues to trade near the lows of the day and could trade lower before the end of the day. Nonetheless, today’s bearish continuation puts crude oil on track to continue to drop and test lower potential support levels.

The first lower target is identified around the 78.6% Fibonacci retracement at $70.03. A little below there is a small rising trendline marking the lower boundary of recent price consolidation. Then, still lower is a prior swing low support level from December 2023 at $67.82. It could be a support area again.

Measured Move Targets $68.52

It is interesting to note that a falling measured move completes at $68.52. The first measured decline began from the October swing high. Following that high the price of crude oil dropped by $12.24 or 15.5%. There will be a match in the two declines based on the price change if the $65.52 price target is reached.

Since that potential target is close to the $67.72 target, as well as the lower uptrend line, and bearish momentum is continuing, it seems like a good chance the lower price levels may eventually be reached before the current correction is complete. Moreover, crude oil could continue to fall further until it triggers a bearish breakdown on a drop below the uptrend line initially, with weakness confirmed on a drop below the $67.11 minor swing low from December 6.

78.6% Retracement Could See Support

Despite the potential bearish scenario, if support is seen around the 78.6% retracement area, a bounce could follow. In that situation, potential resistance would be around the 50-Day MA, now at $72.61. That price level is followed by $73.27, which was both support and resistance previously. Further up is the 200-Day MA at $74.83 and the 20-Day MA at $75.69. Keep in mind that the moving averages are dynamic and that the price represented will change.

Overhead Resistance May Stunt Rallies

Be aware that 200-Day MA is angled down and that the 20-Day only recently turned down after rising for approximately 35 trading days. Further, both moving averages are a little below a bottom boundary line for a large symmetrical triangle pattern. Together, these indicators show potentially significant resistance around the 20-Day MA, since it is above the 200-Day line currently.

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