Crude Oil Price Forecast: Hits Support but Bearish Momentum Remains

Crude oil triggered a bearish continuation on Thursday as it fell below Wednesday’s low to reach a new trend low of 69.37, at the time of this writing. It reached its first lower target support zone at the low of 69.46 yesterday. The price zone may hold and lead to a bullish reversal for crude or a breakdown through the range will indicate a bearish continuation.

Bearish Symmetrical Triangle Breakdown

A breakdown from a large symmetrical triangle consolidation pattern was triggered on Tuesday, with bearish follow through on Wednesday. Wednesday’s low hit a support zone from 69.58 to 69.18. It includes the confluence of several target levels.

The range includes the completion of a descending ABCD pattern at 69.58, an extended retracement at 69.46, and the target from a smaller falling ABCD pattern extended by the 127.2% ratio at 69.18. So far, the range has stalled the descent as the market has recognized the zone, but downward pressure remains given today’s price action.

Resistance Zone at Bottom of Triangle

At some point a pullback of the declining trend will occur to test previous support as resistance. A red highlight on the chart marks potential resistance near the bottom of the triangle pattern from 72.24 to 73.22. Nonetheless, since the breakdown from the triangle pattern just triggered an eventual continuation to the downside is anticipated. That could happen before or after a bounce into resistance.

Next Lower Target is 67.82

The decline triggered by the triangle breakdown indicates a potential bearish continuation on a decisive drop below the low end of the price range at 69.18. That would put crude in a position to fall to the next lower potential support area at the prior swing low of 67.82. It is a higher swing low that is included in the price structure of the symmetrical triangle formation. Below that price level are two Fibonacci potential support areas at 66.58 and 65.48.

Nevertheless, the triangle breakdown points to the potential for lower prices in crude oil. An initial target from the pattern is derived by calculating a measuring objective by taking the height in price and then subtracting that distance in price from the breakdown level of the triangle. The analysis shows a potential target for crude around 43.66 (purple arrows).

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