Crude Oil Price Forecast: Consolidated Near Highs as Demand is Sustained

Crude oil fell to a four-day low of 73.00 on Thursday before buyers took back control. The low was a successful test of support at the prior 50% retracement level at 72.97. A strong recovery followed with the price of crude ending positive for the day and in the top third of the day’s price range.

The high was 74.40, which was essentially a retest of resistance at the 61.8% Fibonacci retracement level of 74.42. Due to a National Day of Mourning in the United States for former president Jimmy Carter, futures markets closed early, which impacted activity levels.

Expanding Triangle Forms Near Highs

Nonetheless, today’s low established the bottom of a possible small expanding triangle consolidation formation. It is forming just below resistance around the 200-Day MA, currently at 75.74. This means that crude could rise to new highs but stay within the expanding consolidation range as defined with two lines around the boundary of the pattern that are pointing away from each other.

A resistance zone is identified on the chart from 75.78 to 76.47 due to the confluence of several indicators, including the 200-Day line. Also, there is the bottom boundary line of a large symmetrical triangle pattern cutting through the range.

200-Day MA Key Test of Resistance

Notice that the area around the 200-Day line was last tested as resistance during the upswing that ended with a peak of 79.09 in October last year. That advance ended with a 13.44 point or 20.5% rise in the price of crude oil, when measured from the September low of 65.65. There might be a measured move relationship between the prior advance and the current rally. The current advance saw crude oil rise by 8.36 points or 12.5% as of Wednesday’s high of 75.47. Bullish sentiment began to dominate again following the 67.11 bottom in early-December and that price is used to measure the current advance.

Time Symmetry Established?

The September rally occurred over 20 trading days, while the current advance to yesterday’s was 21 days. That shows time symmetry. Meaning, once the time matches there is the potential for a pivot in the price of crude. That could occur with a retracement or consolidation. It is also interesting to note that the 8.36-point advance is 62.2% of the 13.44-point rally that started in September. That ratio is very close to the 61.8% Fibonacci relationship.

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