Crude Oil Price Forecast: Eyes Bullish Signal as Support Levels Hold

Crude oil has been testing support around the 20-Day MA for the past couple of days. The pullback low from the recent trend high of 80.33 was at 77.29, and today’s low was 77.32. Also, the dip has been testing support around the 38.2% retracement at 77.24. Crude traded inside day on Thursday as it attempts to hold above support. It establishes key near-term price levels as a rise through the top provides a bullish signal and a decline through the bottom is short-term bearish.

Bullish Reversal Above 20-Day MA Stronger Than If Below It

A bullish reversal following a relatively minor retracement to the 38.2% Fibonacci level would be strengthened by support seen around the 20-Day MA. The 20-Day line had represented trend resistance until Monday’s bullish breakout. This is the first test of the line as support since then. Therefore, a rally from this week’s lows would show strength relative to a bullish reversal at a lower price level.

Strength Indicated Above 79.00

If crude can rise above today’s high of 79.00, a bullish signal will be triggered. Further still on a rally above Wednesday’s high of 79.22. The trend high and weekly high of 80.33 is then the next major price level to rise above for the bull trend to continue. Also, keep an eye on the 50-Day MA, which is currently at 79.82. You can see on the chart how the price of crude is sandwiched between resistance around the 50-Day MA (orange) and support near the 20-Day MA (purple).

Crude is facing a potential upside breakout of a large symmetrical triangle formation. Even if it doesn’t happen the technical environment points to a likely test of resistance around the top downtrend line of the pattern, currently estimated at 82.70. However, notice that the 78.6% Fibonacci retracement is close by. By the time crude reaches the top line the 78.6% Fibonacci line and the trendline may be identifying a much narrower price range.

Measured Move Upside Target of 84.21

There is a measured move that completes at 84.21. If reached, it would put crude about 16.5% above the recent 72.24 swing low, and above the downtrend line. That is a minimum target as seven of the most recent rallies ended up from 15.4% to 30%.

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