Crude Oil Price Forecast: Crude Rebounds, but Key Resistance Levels Loom

A one-day bullish reversal triggered in crude oil on Thursday as it broke out above Wednesday’s high. At the time of this writing, the high for the day was $70.79. Trading remains near the day’s highs, and a new high may be reached before the market closes. Today’s advance followed a potential bottom for the bearish retracement at yesterday’s low of $68.63.

Notice that support for the bearish correction was seen at a rising trendline across the lows of a consolidation pattern established in the final months of last year. Nonetheless, further bullish indications are needed and until then the $68.63 could still be broken to the downside.

Support Seen at Trendline Following a 15% Decline

Potential support around that trendline was discussed previously as a price area that might end the bearish correction. In other words, it would be a likely spot to see signs of strong support. Even if the trendline failed to hold as support, yesterday’s low completed a $12.13 or 15% decline from the recent swing high of $80.76. Certainly, the decline is closer to the end than the beginning. Therefore, a breakdown below the trendline may not go far unless bearish momentum expands.

Similar Drop Seen in Prior Corrections

Four of the most recent bearish measured moves had declines ranging from 14.8% to 18.3%. The current bearish correction is within that range as of yesterday’s performance and therefore likely closer to a bottom. That analysis combined with signs of support following the bottom, improves the chance that crude oil may have completed a bearish correction. Nonetheless, if the $68.63 retracement low fails to hold as support the next lower possible support areas are indicated at $67.82, $66.86, and the 2024 low at $65.65.

Key Resistance is $73.49

Despite the possibility of a bottom being established, it is too early to say with certainty. Rallies face several potentially key resistance areas as the dominant trend remains down. The 20-Day MA is at $71.77 currently and it represents the first key resistance level for a counter-trend rally. A daily close above the line will show strengthening but not enough to indicate a trend reversal.

Currently, the most recent lower swing high, that makes of the downtrend price structure, is at $73.49. Although it is higher than current prices, a bullish trend reversal would be indicated on a rise above that swing high.

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