Crude Oil Price Forecast: Crude Oil Continued to Creep Higher Within Consolidation

Crude oil continued to creep higher on Thursday, as it has been doing all week since putting in a new swing low of 66.86 at the start of the week. It reached a high for the day at 70.67 before encountering resistance that led to a pullback. Interestingly, that high was a successful test of resistance around the internal downtrend line given the subsequent bearish reaction. Since the market recognized the price zone represented by the line it may continue to provide a short-term guide.

Breakout Triggered Above Thursday’s High

A rally above today’s high will trigger a bullish breakout above the line before crude quickly encounters potential resistance around the 50-Day MA pivot, which is at 71.23. That is followed by the top of a declining consolidation pattern (red box) from around 73.15 to 73.27. Crude missed a chance to continue to fall following a bearish trigger on Monday.

Instead, it dropped below prior lows but then quickly reversed higher and ended the day with a bullish key reversal day. The bullish continuation of that one-day reversal has been struggling as crude is rising into a swath of potential resistance, given that it remains within a larger consolidation pattern.

Rebound from False Breakdown

Today’s advance showed strength by reclaiming the 20-Day MA (purple) above 69.97. Given where crude is trading at the time of this writing, it still has a chance to close the day above the line. If it does, that would be another minor sign of strength that needs follow-through. A breakout through a key price level in either direction that quickly reverses in a decisive fashion, is a failure of a breakout attempt. Typically, the reversal of the breakout can be accompanied by sharp moves in the opposite direction. That may still happen with crude if today’s high is exceeded. This does not mean that it will do so, it is only a possibility until further signs of strength are seen.

Watch Weekly High of 70.84

There is another price level representing a key pivot that also needs to be considered. Last week’s high was 70.84. Therefore, an advance above that high will trigger a bullish reversal on the weekly time frame. It would be reached shortly after a breakout above today’s high.

Near-term Support at 69.16

On the downside, a drop below today’s low of 69.16 may lead to a bearish pullback to test support around this week’s lows. Since resistance is being seen around where some signs of resistance would be expected, at the downtrend line, that scenario may yet play out.