Crude Oil Price Forecast: Faces Pullback After Reversal, Eyes Key Support Levels

Crude oil attempted to rally on Thursday but quickly encountered resistance at a new trend high of 73.15. Although that was an eight-day high, sellers subsequently took back control and dropped the price to a low of 70.55. That put crude back below yesterday’s low and generated an outside day, thereby highlighting the current uncertainty in the price of crude.

Last Week’s Low Should Hold for Now

Since last week’s swing low of 69.10 crude has been attempting to rally. Resistance, over the past several days, has been seen around the 38.2% Fibonacci retracement at 72.92, and both the 20-Day and 50-Day MAs, now at 72.60 and 72.44, respectively. It reflects continued selling pressure that was first indicated by the breakdown of a large symmetrical triangle pattern in the beginning of September.

Following a new low on September 10, crude oil began to strengthen and eventually moved back into the parameters of the triangle, putting it at risk of a failed breakdown. Subsequently, crude again broke down from the triangle and remains below it.

Uncertainty Dominates

Either the bearish decline or the bullish potential pattern failure will win out. For now, uncertainty dominates but with a short-term upward bias. Last week’s swing low of 69.10 found support at a key price area identified by both the 78.6% retracement and the completion of a falling ABCD pattern. Unless last week’s low is broken to the downside, a continuation of the counter-trend rally is anticipated to prevail.

Higher but nearby price targets include the 50% retracement at 74.10 and the 61.8% retracement at 75.28. Resistance may also be seen around the bottom boundary line of the triangle, while a decisive breakout above that line adds to the uncertainty. A bullish continuation through the top of the triangle then becomes a possibility.

Inside Week Reflects Uncertainty

Uncertainly is also indicated on the weekly chart as this week’s trading is contained within the range from last week. An inside week is a form of consolidation. Today’s high of 73.15 is now the highest price for the week. If this week ends with the same high, a weekly breakout will be triggered on a rally above it.

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