Crude Oil Price Forecast: Crude Oil Bounces After Hitting New Correction Low of $70.59

Crude oil continued its bearish correction on Thursday, reaching a new retracement low of $70.59 and then bouncing intraday. At the time of this writing, crude oil continues to trade near the highs of the day, putting it on track to complete a bullish hammer candlestick pattern today. It should close in the top third of the day’s range, above $71.02, to retain strength. Subsequently, a decisive breakout above today’s high, at $71.73 currently, shows strength and could lead to a higher bounce.

Short Term Trend Remains Down

Keep in mind that the short-term pattern in crude, since the January swing high, is a declining trend. A rise above today’s high would signal a countertrend advance with crude rising into multiple potential resistance levels. Moreover, the decline today put the price of crude oil back below the 50-Day MA after a test of resistance around the 20-Day MA earlier this week. This suggests that the retracement low might not have been reached yet.

12.6% Bearish Correction Completed

Today’s low completed a $10.17 or 12.6% bearish correction from the most recent swing high in January. Therefore, this downswing is a match on a percentage basis with the largest downswings seen since September of last year. The value of crude oil previously decreased by 12.6% from the October 8 swing high, the largest downswing since September.

What this indicates is that the low for the retracement may have been reached, and if not, it should do so if the 78.6% retracement at $70.03 is tested as support. A little below that level is a minor swing low at $68.82, along with a short rising trendline across the bottom of recent price action.

Lower Support Points to $70.03

This is not to say that crude oil couldn’t fall lower. Certainly, the trendline could be broken and lower price levels tested. There are larger downswings that occurred following the April 2024 peak and crude would be closer to matching those larger drops if the 78.6% level or trendline support is reached. The largest decline since then was around 18%.

It is also interesting to note that the drop today triggered a bearish continuation on the weekly chart as last week’s low of $70.91 failed to hold as support. Moreover, the decline today put crude oil back below its 20-Week MA after rallying back above it earlier in the week. The 20-Week line is at a price of $72.14 currently.

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