Crude Oil Price Forecast: Bull Signal Above 84.69

Crude oil rallied into resistance around the downtrend line on Thursday before pulling back from the highs. Resistance was seen from the day’s high of 83.69. That was slightly above the line. Crude remains in a corrective formation taking the form of a declining ABCD pattern of lower swing highs and lower swing lows. Thursday is on track to generate a second lower swing high. Therefore, a continuation of the correction is possible or a successful breakout above the downtrend line.

83.69 is Now Key Price Level

Since today’s high is part of the downtrend price structure, a rally above it will trigger a potential bullish reversal of the bearish correction and a breakout above the downtrend line. A daily close above each would confirm strength. Of course, today’s high carries greater weight than the trendline as it a primary trend structure. Once there is a daily close above 83.69, crude should be able to accelerate an advance as a trendline was broken and a breakout from a large symmetrical triangle will have triggered.

Potential Symmetrical Triangle Breakout

Crude has been tracing out the triangle for more than six months. This means once the trendline is busted to the upside, the potential for a sharp increase in demand that helps propel prices higher is a possibility. During the triangle volatility dies down, which is evident by the tightening swings. Since crude would be breaking out of two patterns, the trendline and triangle, it has a chance to see a noticeable pickup in demand following the breakout.

Higher Targets Start at 85.64

Following an upside breakout above 83.69, crude would first be heading towards the recent swing high at 84.74 (A). Higher initial targets include Fibonacci levels at 85.64 and 86.12. Nevertheless, once a daily close above 84.74 confirms strength, cruise has a chance to test the April swing high at 87.90. There is a good chance it could eventually get above that price level given the breakout of the symmetrical triangle.

Rising off Strong Support Zone

On the downside, support for the bearish correction was found at the recent swing low of 80.29. It completed a 61.8% Fibonacci retracement of the shorter upswing and was followed by a two-day rally. That low also completed a 38.2% Fibonacci retracement of the full upswing, beginning from the June swing low. Further, the 50-Day MA was a little lower at 80.00.

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